Key Takeaways:
- Trade tensions, shifting regulations, and supply chain disruptions are reshaping how companies manage procurement.
- Companies embracing AI innovations will be better positioned to increase efficiency and minimize risk – while those who don’t will lag behind.
- Robust governance and sound risk management are more critical than ever to ensure safe and resilient supply chains.
The role of procurement has expanded in recent years and, today, the function is essential for survival in an increasingly complex and competitive world. As businesses grapple with inflation, supply chain volatility, and the rapid adoption of AI, procurement leaders are under pressure to evolve quickly – or risk being left behind.
With 74% of Chief Procurement Officers (CPOs) planning to integrate AI by the end of 2025, the future is here – now. At the same time, the global procurement software market will surge to $9.5 billion by 2028, thanks to growing investments in automation, analytics, and digital transformation.
Against this backdrop, a recent Ardent Partners’ report, Procurement 2025: BIG Trends and Predictions is helping procurement professionals keep pace with rapid change. From AI-powered sourcing and contract management to intensified competition in supplier selection, this report provides a roadmap for the future of procurement.
Discover the must-know insights from Ardent Partners’ latest report—essential reading for every procurement leader looking to stay ahead.
AI Is Advancing – FAST
One acronym jumps off the pages of this report, and that’s AI. Artificial Intelligence is absolutely reshaping procurement, making processes smarter, faster, and more strategic than ever.
AI-driven sourcing tools are analyzing massive amounts of data to help organizations identify the best suppliers, predict market trends, and optimize their sourcing strategies. AI can automate contract creation, track compliance, and flag potential risks, as well, cutting down on manual work and reducing costly errors.
Companies are also using AI-powered risk analysis tools to continuously monitor supplier performance and external factors, propelling businesses to stay ahead of disruptions, rather than reacting to them after the fact.
The Ardent Partners’ report also highlights the rise of AI-powered eSourcing platforms, making the bid process significantly more efficient with automation. These platforms eliminate the need to manually sort through vendor options and bids and, instead, leverage AI to quickly assess supplier capabilities and performance metrics. The result? More informed, data-driven decisions about their vendors.
According to Vishal Patel, SVP of Product and Customer Marketing at Ivalua, AI is moving beyond just automating processes to making real-time strategic decisions. “The emergence of autonomous agents powered by Generative AI (GenAI) in procurement is shaped by several key trends, each supported by real-world data and insights,” he says.
Companies that embrace these innovations in AI will be better positioned to increase efficiency and minimize risk – while those who don’t will lag behind.
- A Volatile Market Means a Lot of Uncertainty
The procurement landscape is facing serious volatility, and businesses must stay agile. One of the biggest challenges ahead is dealing with inflation and rising interest rates. Procurement teams are already dealing with higher costs, but with global trade instability and supply chain disruptions continuing into 2025, they’ll need to double down on cost management strategies.
According to the Federal Reserve, interest rates are expected to remain elevated for an extended period. This trend will make borrowing significantly more expensive, directly impacting procurement leaders and their ability to manage budgets effectively. The heightened cost of financing means organizations must explore strategies to optimize their spending. For procurement teams, this translates to an urgent need to negotiate more favorable terms with suppliers and implement cost-saving measures wherever possible.
The pressure doesn’t stop there. Procurement leaders are also facing an increasingly volatile landscape as they grapple with rising pricing pressures and ongoing supply shortages. These challenges are making it harder to secure competitive deals, further intensifying the need for efficient sourcing strategies. To stay ahead, organizations are turning to competitive sourcing practices designed to create more leverage during negotiations and to secure cost-effective, high-quality options for critical goods and services.
“Rapid policy shifts and associated “drama” tend to create pricing volatility, longer lead times, and supplier instability, making global sourcing a high stakes balancing act,” Andrew Bartolini, author of the report and Founder and Chief Research Officer writes. “Success in 2025 will depend on how well teams can anticipate, adapt, and outmaneuver the next round of global trade drama.”
AI-driven eSourcing platforms can help them diversify supplier networks and help organizations gain the upper hand. Speed and flexibility are essential; procurement teams must be ready to pivot quickly, and leverage technology to automate and optimize the process of selecting new suppliers.
- Procurement is Changing their Tactics
With new technologies at their disposal, procurement teams are taking action and adjusting their strategies, so that they can ride the wave of market uncertainty. Here are a few of the tactics they’re exploring:
- They’re replacing RFPs with AI-Powered marketplaces. For years, procurement teams relied on the Request for Proposal (RFP) process to source suppliers, compare bids, and select vendors. But AI-powered marketplaces are set to disrupt that approach entirely.
Instead of lengthy, manual RFPs, AI-driven supplier matchmaking platforms are automating vendor selection, enabling teams to compare offers in real-time and receive instant recommendations based on historical performance and risk analysis. That means less time and effort spent vetting suppliers and better insights on the trends, pricing patterns, and performance metrics that make vendor selection a more data-driven process.
- They’re Building Stronger Relationships. Ensuring a resilient supply chain has become non-negotiable, especially in today’s unpredictable world. The first crucial step? Building strong relationships with a diverse network of suppliers. Achieving this requires clear communication and seamless collaboration—both of which can be significantly enhanced with modern technology.
Collaborative forecasting and long-term planning allow suppliers, manufacturers, and distributors to align their production schedules and inventory management. By working together, they can reduce inventory holding costs and enhance supply chain responsiveness, preventing overstocking and stockouts, and reducing the risk of lost sales.
Learn how Ivalua is empowering market leaders like Ikea and others with our supplier collaboration tools.
- They’re tightening their wallets. Inflation and economic uncertainty are making cost reduction a C-suite priority – in fact, 74% of CPOs say cost savings is their primary objective. Unfortunately, unnecessary spend can go unnoticed – but it has a huge impact.
For example, tail spend is one of the biggest areas of waste; small, unmanaged purchases can make up 20% of a company’s spend but involve 80% of its suppliers. Without oversight, these costs add up quickly, and procurement teams often don’t realize how much money is slipping through the cracks.
Maverick spending – unauthorized purchasing activities that occur outside of an organization’s established procurement processes and guidelines – is another big problem – costing companies about 10-20% of their savings.
AI-driven insights can help reduce tail spend and automate low-value purchases, saving time and freeing up procurement professionals to focus on more strategic work. They can also help reduce maverick spending by analyzing purchasing patterns, identifying unauthorized or non-compliant transactions, and flagging deviations from preferred supplier agreements.
By providing real-time visibility and automated enforcement of procurement policies, AI enables organizations to redirect rogue spending toward approved vendors, ensuring better cost control and contract compliance.
“While they are not trying to manage more spend, almost every CPO is trying to manage the spend they do influence better,” the report reads. “This can manifest itself in many different ways including more active sourcing or robust category management, better and earlier stakeholder engagement, and deeper supplier collaboration.”
3. Risk Management and Compliance
AI doesn’t always get it right—it can make mistakes, and its effectiveness depends heavily on the quality of the input it receives. This is why robust governance and sound risk management are more critical than ever to ensure its responsible and effective use.
Protecting the Supply Chain
With procurement teams relying on cloud-based platforms, automated sourcing tools, and AI-driven risk assessments, cybercriminals have more opportunities to exploit vulnerabilities in supplier networks. A single breach can expose sensitive data from contracts and financial transactions – and the consequences can be extremely costly.
In April 2024, business intelligence firm Sisense suffered a major security breach that put its customers at risk of supply chain attacks. Reports suggest that hackers gained unauthorized access to the company’s GitLab code repository, which then led to the compromise of Amazon S3 buckets storing sensitive customer data, including access tokens and credentials. The U.S. Cybersecurity and Infrastructure Security Agency (CISA) responded by issuing an alert, advising Sisense customers to reset their credentials and stay vigilant for any suspicious activity.
To reduce risk and protect the supply chain, Ardent Partners suggests that procurement teams collaborate closely with IT teams to implement robust data encryption, access controls, and other security measures. “Those charged with protecting a business’ assets, systems, and intelligence should also be partnered with procurement to build robust third-party risk management strategies that mitigate potential vulnerabilities in the supply chain,” Bartoloni writes.
Upholding Sustainability Initiatives
In addition to cybersecurity risks, Environmental, Social, and Governance (ESG) initiatives face an uphill battle, as the administration’s shifting political views may weaken corporate ESG commitments.
While some businesses may scale back formal ESG programs, cost-conscious and risk-averse companies are still incorporating sustainable sourcing, ethical labor practices, and governance transparency,–but now under the umbrella of “efficiency and risk management.”
Procurement leaders must navigate these murky waters to keep sustainability and ethical sourcing at the top of the priority list, despite the changing terminology.
“Ready! Aim! Source!”
The reality is that trade tensions, shifting regulations, and supply chain disruptions are reshaping how companies manage procurement, making strategic sourcing a top priority for 2025. That means businesses must be more agile and proactive in selecting, managing, and collaborating with suppliers.
At the same time, growing competition for critical materials and services is forcing organizations to rethink how they approach procurement strategies. To stay competitive, many are expanding their sourcing pipelines and leveraging AI-powered eSourcing tools to identify opportunities, streamline processes, and make data-driven decisions.
The race for resources in today’s interconnected economy demands innovation and adaptability. By adopting smarter, more dynamic sourcing strategies, companies aren’t just cutting costs—they’re building the agility and resilience required to mitigate risks and seize opportunities in an unpredictable global market.
“Start the year with a sourcing pipeline that is double the size of your team’s capacity,” Bartoloni advises. “Start to use technology at some level for every large event. Over time, the team’s sourcing capacity will inevitably grow.”
Businesses that prioritize advanced procurement technologies and methodologies will position themselves to lead their industries confidently into the future. Discover the trends transforming procurement today. Download your copy of Ardent Partners’ report Procurement 2025: BIG Trends and Predictions and find out how forward-thinking organizations are leveraging these trends to their advantage.
