Procurement leaders must focus on building resilience amid ongoing energy market volatility

Oil markets reacted swiftly to the announcement of a US-Iran framework peace deal, with Brent sliding sharply as traders priced in the possibility of the Strait of Hormuz reopening. Yet for many chief procurement officers, the more important story is not the immediate fall in crude, but what comes next.

Recent market moves suggest the agreement has eased some pressure on energy costs, but not removed the uncertainty that has dominated supply chains since the conflict began in F...

ebruary. On 18 June, Brent crude had dropped to its lowest level since the war began, while U.S. fuel prices also eased, with AAA putting the national average at just under $4 a gallon. Even so, oil later recovered some ground as traders questioned how quickly supply routes could normalise and how much detail the deal would ultimately contain.

That mixed reaction reflects a wider reality for procurement teams: volatility has become a structural feature rather than a temporary disruption. Leaders who have spent the past few years coping with the after-effects of Covid-19 and the war in Ukraine are now being asked to absorb another shock, while preparing for the next one before this one has fully passed.

At last month’s World Procurement Congress in London, Nestlé’s Jacob Nielsen warned that rising energy, jet fuel and packaging costs could feed through into food inflation, including higher coffee prices. He argued that procurement must keep proving its value to the business, saying there is “nothing like a crisis to get things done”. Etihad’s Cassie Mackie offered a simpler warning: “build for the next crisis, not the last one”.

That is the central lesson for the function. Whatever form the next disruption takes, the answer is unlikely to be a perfect forecast. More likely, it will be a stronger operating model: diversified sourcing, better visibility across tiers, faster scenario planning and resilience designed into day-to-day procurement rather than bolted on afterwards.

As Roland Berger has argued in its work on future procurement models, the coming decade could unfold through very different combinations of technology and geopolitics, making linear planning increasingly inadequate. In that context, the job for CPOs is less about predicting the next shock than ensuring the organisation can absorb it.

Source: Noah Wire Services