Procurement in 2025: driving resilience and growth through AI and strategic reorientation

As global uncertainties persist, procurement functions are embracing AI and new sourcing strategies in 2025, redefining their role as key drivers of organisational resilience, cost savings, and risk management amidst ongoing disruptions.

The procurement landscape in 2025 is marked by resilience amid complexity, as Chief Procurement Officers (CPOs) navigate an environment of heightened uncertainty, ongoing supply chain disruptions, and shifting global trade dynamics. Acc...

ording to insights from a recent webinar featuring Andrew Bartolini of Ardent Partners and Paul Blake from GEP, the procurement function is experiencing both significant challenges and promising growth, underpinned by increasing spend under management and accelerating adoption of digital technologies, especially artificial intelligence.

Economic and geopolitical volatility continues to shape procurement strategies this year. With nearly 57% of CPOs acknowledging high levels of uncertainty—almost double last year’s figure—and 90% anticipating a tougher year ahead, procurement teams are wrestling with renewed trade tensions and a reversal from decades-long trends toward global free trade. These factors have compelled many companies, particularly in the West, to rethink decades-old sourcing models heavily reliant on low-cost countries like China. Instead, there is growing emphasis on nearshoring, supplier diversification, and building more resilient, agile supply chains—traits now seen as critical differentiators between organisations that succeed amid disruption and those that struggle.

One of the clearest indicators of procurement’s expanding influence is the steady rise in spend under management, which now exceeds 70% for the first time in two decades of research. On average, procurement teams manage around 71% of total enterprise spend, unlocking substantial opportunities for cost savings, estimated between 6% to 12% during initial contract periods. Yet, almost a third of spend remains unmanaged, representing a significant untapped area for enhancing efficiency and strategic impact. This trend underscores procurement’s growing centrality in driving organisational value, particularly as cost reduction ascends once again as a top executive mandate. Post-pandemic inflationary pressures and economic uncertainty have refocused priorities on operational efficiency and savings—a pattern reminiscent of procurement’s role during the Great Recession.

Risk mitigation has also moved to the forefront of procurement agendas. The frequency of global disruptions—from geopolitical tensions to abrupt supply chain shocks—has transformed risk management from a theoretical discussion into a continuous strategic imperative. Procurement teams now seek to embed robust risk frameworks capable of preemptive monitoring and agile response, complementing broader supply chain reconfigurations aimed at balancing resilience with cost competitiveness.

Digital transformation remains a cornerstone of procurement evolution, yet 2025 signals a pivotal moment as artificial intelligence takes centre stage. While procurement functions have long invested in technology to enhance visibility and streamline processes, this year marks the emergence of AI as a primary priority. The technology’s promise extends beyond automation towards more sophisticated, intelligence-driven capabilities, including predictive analytics and decision support. Nonetheless, a Gartner survey cautions that only 23% of supply chain organisations currently maintain a formal AI strategy, suggesting a gap between AI’s potential and the adoption of structured, scalable investments that can support long-term transformation.

Industry data supports the optimism around AI’s impact on procurement. For instance, research from WorldMetrics indicates that 67% of procurement organisations plan to increase AI investments in the next two years, with AI-powered spend analysis capable of reducing costs by up to 25%. Moreover, 82% of procurement professionals believe AI enhances supplier risk management, while firms characterised as best-in-class achieve over 8% cost savings and manage approximately 91% of spend, integrating AI throughout their source-to-pay lifecycles.

Leading consultants highlight that procurement-led transformation can significantly influence overall business performance. McKinsey notes that procurement initiatives often contribute more than 20% of the financial impact in transformation programmes, driven by accelerated savings and the reimagination of operating models based on a comprehensive understanding of the cost base. This view aligns with findings from surveys such as those from Procurement Magazine, which reveal that 68% of procurement leaders prioritise cost reduction and efficiency, with 66% identifying AI integration as a key enabler.

Beyond cost and risk, contract optimisation emerges as a fertile area for value recovery. SAP reports that inefficiencies and compliance gaps in contracts cost enterprises millions yearly, while AI tools offer potential reductions in processing costs by up to 80% through automated extraction of contract terms, invoice reconciliation, and task automation.

In summary, the state of procurement in 2025 is one of growing strategic influence amid persistent uncertainty. The function is evolving from a primarily operational role into a critical business driver, leveraging increased spend under management, enhanced risk frameworks, and advanced technologies to meet executive expectations for savings, resilience, and agility. Although challenges remain—particularly in fully realising AI’s transformative potential—procurement stands ready to lead organisations through a turbulent future, balancing cost, risk, and innovation with growing sophistication and impact.

Source: Noah Wire Services