UK Procurement Trends and Outlook for 2025
UK Procurement Trends and Outlook for 2025
As the Procurement profession prepares to face a new year, we identify the trends that will shape the profession and affect procurement activities in 2025, including prevailing global issues and themes.
We hope you find this useful as you plan the year ahead and decide where to focus efforts and resources. Our team of procurement specialists will be delighted to talk to you about any of the issues raised here and how you can prepare to meet challenges and seize future opportunities.
De-globalisation and the growth of sourcing locally
Globalisation has been a socio-political phenomenon for many years. In recent times the reliability of global supply chains has been adversely affected by geo-political factors and the impact has been wide spread. Events such as the COVID-19 pandemic, the Russian invasion of Ukraine and the growth of protectionist/isolationist politics have increased volatility in supply chains and reduced resilience.
The result has been the emergence of greater regional and local sourcing. Organisations are looking to de-globalise supply chains. Businesses are putting a greater focus on reducing the dependency risk in their supply chains. We have seen the growing popularity of “near-shoring” and businesses reviewing their business continuity and supply mix.
Local sourcing can have many benefits. It supports the local economy, drives diversity in the supply chain, reduces supply chain failure and is often more sustainable.
Supply Chain Resilience
Supply chain resilience continues as a megatrend. Supply chains are experiencing more disruption, issues and facing more risks than ever before. Businesses will need to be proactive in addressing issues and risks and agile responding to disruption in their supply chains. The most sophisticated businesses recognise this and are taking management steps to ensure the integrity of their supply chains or at least get ahead of likely risks and issues and improve their supply chain resilience.
Procurement will continue to play a critical role is supporting businesses to get through periods of turmoil and volatility alongside prevailing challenging operating conditions.
Enhancing value from supply chains
Procurement will always focus on lowering costs and delivering value. However, the definition of value is evolving. Value should include quality measures, relationship management, innovation and delivery as well as pure financial value. Procurement professionals should aim to balance technical and commercial outcomes.
Public sector procurement soon to be governed by the Procurement Act 2023, which includes a broad definition of value and has replaced the “Most Economically Advantageous Tender” with “Most Advantageous Tender” to recognise the price may not be the only driver for a contract’s award.
Challenging economic conditions will nonetheless continue put emphasis on financial value for most businesses.
Scope 3 emissions and reduction of tCO2e as part of becoming Net Zero
Businesses continue to work hard to achieve Net Zero. For procurement, the focus will be on the requirement to reduce Scope 3 emissions and achieve the triple bottom line of financial, social and sustainability benefits.
Mature procurement departments will continue to embed best practice sustainability measures and the assessment of their supply chain emissions. Particular attention should be given to ensuring suppliers meeting strict sustainability KPIs as well as capturing and reporting on this information. This will need to take place alongside sustainable procurement initiatives that contribute to the reducing organisations tCO2e.
Contract Management and Supplier Relationship Management
As businesses look to achieve greater value from their suppliers, there will be a greater focus on consistent and effective contract and supplier relationship management. There is value to be found throughout the contract life cycle and not just during the sourcing exercise.
In the public sector, the Procurement Act 2023 requires contracts over £5m to have at least three KPIs to assess ongoing performance. Performance will be rated as Good, Approaching Target, Requires improvement, Inadequate and Other.
Digitalisation, Data and Generative AI in Procurement
Procurement teams will continue to use a range of technology to digitally transform their functions. ‘Time to serve’ with a focus on making processes faster and more streamlined, is a key driver for the investment in procurement technology. An emphasis on efficiency alongside financial value will be the order of the day.
Organisations will also aim to improve their use of data, ideally in real time. Deep data analysis, especially when it comes to spend data, will inform category planning and improve spend transparency. More advanced data analysis, supported by data tooling and AI, will drive more data-driven decision-making.
The growth of AI and the reduction in manual tasks will develop in earnest. This will release staff time for higher value activity, including working with stakeholders in their businesses, supplier relationship management and innovation.
Future Talent in Procurement
The procurement talent pool and required skillset will continue to evolve rapidly. Chief Procurement Offices (CPOs) will need to ensure they can attract new talent, including Gen Z, in order to ensure that they have the talent pipeline for the future. They will also have to think about how they ensure that these new recruits have the skills they need to thrive. The graduate talent market will continue to be highly competitive and employers will need think about their employee value proposition to attract top talent.
How we can help you
Our team support clients in addressing the diverse challenges in procurement to ensure the continue to deliver value for their businesses. Our clients include large enterprises, public sector organisations and mid-market businesses. Talk to us now about your priorities in procurement and the challenges we can help you with.
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Author: Robert Wild