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Written by Marijn Overvest | Reviewed by Sjoerd Goedhart | Fact Checked by Ruud Emonds | Our editorial policy

Global Procurement Strategy and Process in 2025

Table of contents

What is global procurement?

  • Global procurement is the strategic practice of acquiring goods, services, or materials from suppliers worldwide to secure the best combination of cost, quality, and reliability.
  • Global procurement helps large businesses maintain a steady supply of high-quality and affordable goods.
  • It is important to monitor logistics as global procurement can involve hidden expenses, political risks, and financial uncertainties.

What is Global Procurement?

Global procurement represents a strategic approach to sourcing goods, services, and materials from the global market. It enables companies to expand their sourcing beyond national borders by taking advantage of benefits such as reduced costs, improved quality, and access to innovative resources available in different parts of the world.

Global procurement opens up opportunities for collaboration with numerous suppliers, reducing dependency on a single local partner and increasing business flexibility.

The main advantage of global sourcing is the cost-effectiveness that comes from taking advantage of lower production costs abroad. In this way, companies can increase both their competitiveness and profitability. Furthermore, using a wider network of suppliers allows them to improve the quality of supply and adopt technologies used around the world.

A comprehensive global procurement strategy entails establishing robust communication and logistical links between the company and its international suppliers, along with continuously monitoring market trends and innovations.

How to Create Global Procurement in 7 Steps

Global procurement enables companies to expand internationally, improve efficiency, reduce costs, and become more competitive. In a dynamic business environment, adapting to the global supply chain is crucial.

This guide, outlining seven key steps—from analyzing the current state and developing a strategy, to identifying suppliers, negotiating, implementing technologies, managing risks, and continuous improvement—helps organizations establish an efficient and flexible global procurement system.

global-procurement (2)

1. Analysis of the Current State and Goal Definition

Initially, it is necessary to analyze all aspects of the current procurement process within the organization. This involves mapping out existing processes, identifying weak points, and understanding current costs and performance. Based on the analysis, both short-term and long-term goals are defined, such as reducing costs, improving product or service quality, increasing process efficiency, and ensuring supply continuity.

2. Development of Procurement Strategy and Policy

A strategy is formulated to guide all activities related to global procurement. This includes selecting markets, defining supplier criteria, and aligning the procurement strategy with overall business goals. Detailed policies, standards, and procedures are developed to regulate the entire procurement process, ensuring consistency and transparency in all business transactions.

3. Identification and Evaluation of Suppliers

Conduct extensive research to identify global suppliers who meet the established criteria. Various tools and methodologies (e.g., scoring systems) are used to assess supplier quality, financial stability, reliability, and alignment with your standards and ethical norms.

4. Negotiation and Contracting

Define negotiation goals, limits, and key conditions, as well as success criteria. Actively negotiate on prices, delivery deadlines, quality, warranties, and other conditions. After successful negotiations, contracts are drafted that clearly outline the obligations and rights of both parties, including mechanisms for dispute resolution.

5. Implementation of Systems and Technologies

Implement IT solutions and software tools (e.g., ERP systems, procurement management platforms) that enable automation and process tracking. Ensure that the new systems are integrated with existing business processes, and provide adequate training for employees on how to use them.

6. Risk Management and Performance Monitoring

Proactively identify potential risks in the procurement process—from supply chain disruptions to market condition changes. Establish KPIs (key performance indicators) and monitoring systems that allow for timely identification of issues and the implementation of corrective measures.

7. Continuous Improvement and Process Optimization

Regularly gather feedback from all process participants (both internal and from suppliers) and conduct periodic reviews. Based on the collected data, continuously adapt and improve the processes to achieve greater efficiency, reduce costs, and enhance service quality.

The 8 Steps of Global Process

In today’s competitive global market, companies must continuously evolve their procurement strategies. This eight-step guide offers a concise framework to optimize global procurement—from assessing current processes to implementing technology and managing risks—by incorporating key elements like preliminary research, detailed supplier evaluation, and performance monitoring.

global-procurement (1)

1. Analysis of the Current State and Goal Definition

This step involves a detailed evaluation of the company’s existing procurement processes. It begins with preliminary research, where the company identifies the optimal locations for production, assesses market trends, analyzes customer requirements, and examines competitor activities. Based on this comprehensive analysis, clear and measurable short-term and long-term goals (such as reducing costs, improving quality, increasing efficiency, and refining brand positioning) are defined.

Real-life Example: Analysis of the Current State and Goal Definition
SolarWave Technologies—a mid‑size German solar inverter maker—benchmarked costs and lead times across Eastern Europe and Southeast Asia, reviewed industry reports showing cheaper, high‑quality components from Asian suppliers, gathered customer requirements for a 20 % cost reduction and ≤10‑day delivery, and noted competitors’ successes in Malaysia and Taiwan; on this basis, they set goals to cut component costs by 10 % and lead times to under 12 days within six months, and to achieve a 15 % overall procurement cost reduction with a 98 % on‑time delivery rate within 12–18 months.

2. Development of Procurement Strategy and Policy

Based on the analysis, a strategy is created that aligns procurement activities with the company’s overall business goals. In this step, detailed policies and procedures are formulated to set the rules, standards, and expectations for the entire procurement process, ensuring consistency and transparency.

Real-life Example: Development of Procurement Strategy and Policy
EcoPack Solutions—a U.S.‑based sustainable packaging manufacturer—translated its cost, quality, and sustainability goals into a formal procurement strategy by partnering with certified recycled‐material suppliers in Canada and Europe, defining supplier scorecards (price competitiveness, delivery reliability, sustainability certifications), launching a centralized e‑procurement portal with embedded policy compliance checks and automated approval thresholds, and publishing a procurement policy handbook that codifies ethical sourcing guidelines, risk‑management procedures, and key performance metrics to ensure every purchase advances its targets of cutting material costs by 12 %, reducing carbon footprint, and maintaining ISO 14001 certification.

3. Market Research and Supplier Identification

In this step, the company conducts in-depth market research to gather information about the global market. It identifies potential suppliers by establishing selection benchmarks derived from the preliminary research. This process enables the company to explore various options and trends before forming a partnership.

Real-life Example: Market Research and Supplier Identification
MedLife Pharma—a mid‑size Spanish pharmaceutical firm—commissioned a detailed market intelligence study to map API manufacturers in India, China, and Eastern Europe, evaluating each against GMP certification, annual capacity, unit cost, on‑time delivery record, and regulatory audit outcomes; by applying its benchmarks of FDA/EMA approval, minimum batch size, and target cost per kilogram, MedLife shortlisted six high‑potential suppliers (three in India, two in China, one in Poland), enabling a side‑by‑side comparison of price, quality, and supply‑risk profiles before entering partnership discussions.

4. Supplier Evaluation and Selection

After identifying potential suppliers, a detailed evaluation is conducted. This stage serves as the sourcing event, where the company applies pre-defined benchmarks and scorecard systems to assess supplier quality, reliability, financial stability, and compliance with internal standards, ensuring that only the best partners are selected.

Real-life Example: Supplier Evaluation and Selection
BrightAuto Components—a Tier 1 automotive parts supplier—invited its six shortlisted vendors to submit detailed proposals, then applied a weighted scorecard covering quality audit pass rates, financial stability ratios, average lead times, and CSR compliance; after virtual presentations, on‑site factory inspections, and credit‑worthiness checks, BrightAuto ranked each supplier and awarded contracts to the top two—one in Mexico for electronic control units and one in Thailand for stamped metal parts—ensuring optimal cost, quality, and supply‑chain resilience.

5. Negotiation and Contract Finalization

In this step, key negotiation objectives are defined and the company negotiates terms of cooperation, including prices, deadlines, and warranties. Following successful negotiations, contracts are formalized, clearly outlining the rights and obligations of both parties to ensure legal protection and clarity.

Real-life Example: Negotiation and Contract Finalization
CleanFuel Systems—a U.S.‑based hydrogen fuel cell developer—entered negotiations with its two shortlisted platinum catalyst suppliers by first defining objectives to secure a 12 % volume discount, maximum 14‑day lead times, a minimum 99.5 % quality acceptance rate, and a two‑year performance warranty; after three virtual negotiation sessions and an on‑site quality audit, they agreed on tiered pricing tied to annual purchase volumes, strict penalty clauses for any late deliveries, detailed inspection and acceptance procedures, payment terms with 30 % upfront and 70 % on delivery, and a clear dispute‑resolution process—then formalized these terms in legally binding contracts outlining all rights, obligations, schedules, and metrics to guarantee both cost savings and supply stability.

6. Implementation of Technology and Systems

Appropriate IT solutions—such as ERP systems and procurement management platforms—are selected and implemented to automate processes, improve process visibility, track transactions, and integrate with existing systems. This phase also involves creating a detailed performance analysis schedule and defining team responsibilities to ensure effective implementation.

Real-life Example: Implementation of Technology and Systems
GreenHarvest Foods—a Canada‑based organic food distributor—rolled out an integrated SAP Ariba procurement module connected to its existing Microsoft Dynamics 365 ERP, configuring automated purchase‑order workflows, real‑time spend analytics dashboards, and supplier portal access; they defined a performance review calendar with monthly KPI reports on order cycle times and cost variances, assigned clear system‑admin, buyer, and approver roles, and trained all stakeholders on the new platform—ensuring end‑to‑end process automation, full transaction visibility, and accountability across the procurement team.

7. Risk Management and Performance Monitoring

In this stage, the company identifies potential risks that may affect the procurement chain, such as market changes or supply disruptions. Key performance indicators (KPIs) and comprehensive monitoring systems are established to facilitate the timely detection of issues and the implementation of corrective measures, ensuring smooth ongoing operations.

Real-life Example: Risk Management and Performance Monitoring
RiverFlow Energy—a U.K.‑based hydroelectric equipment supplier—mapped its key risk factors (seasonal water‑level fluctuations, component shortages, geopolitical tariffs), implemented a real‑time risk dashboard in its procurement platform with KPIs on supplier fill‑rate, lead‑time variance, and currency‑exchange exposure, and set up automated alerts for any KPI breach; they also established quarterly risk‑review meetings, defined contingency actions (dual‐sourcing critical turbines, buffer‐stock policies), and assigned clear roles for risk‐monitoring and escalation, ensuring they can detect disruptions early and execute corrective plans without interrupting project timelines.

Boot Camp

8. Continuous Improvement and Process Optimization

This final step focuses on gathering feedback, conducting regular reviews, and analyzing the entire procurement process to identify areas for enhancement. The goal is to continuously adapt and optimize the process to reduce costs, improve quality, and maintain the company’s long-term competitiveness and efficiency.

Real-life Example: Continuous Improvement and Process Optimization

AquaPure Filters—a mid‑size U.S. water‑filtration system manufacturer—instituted quarterly procurement review workshops where cross‑functional teams analyzed supplier scorecards, spend analytics, and lead‑time KPIs; they established a continuous feedback loop with key vendors, piloted process improvements like just‑in‑time deliveries and consolidated orders, tracked performance through a dynamic dashboard, and iteratively refined their sourcing playbook—resulting in a 7 % reduction in total procurement costs and a 15 % boost in on‑time delivery within a year.

Advantages and Disadvantages of Global Procurement

Here’s a side-by-side comparison of the advantages and disadvantages of Global Procurement.

Advantages
1. Enables cheaper sources of labor
2. Talented workforces that can provide efficient workflow.
3. The production capacity of the company is increased.
4. Increased investment in technological advancements.
Disadvantages
1. Company's financial exposure and political risks to various countries.
2. Hidden costs due to varying cultural and economical implications
3. Increased Monitoring of Logistics cost.
4. Complexity and cost of complying with diverse international regulations and standards.

Additional Benefits of Global Sourcing 

So what exactly are the advantages of global procurement?

Should I even try to explain that in this article? Well, since we do have the disadvantages right below, it’d make sense to talk first about the advantages, right?

Without further ado, below are the well-known advantages of global procurement:

1. Costs are cheaper

With global product manufacturing enabling countries with cheaper sources of labor, companies have the opportunity to get high-quality materials for as little cost as possible. Factories in China, India, and Taiwan are able to produce as much quality material, but with costs that are cut by more than half compared to those products that are in the United States.

2. Skilled workforce

We’ve already talked about the cheap labor that comes from countries such as China, Taiwan, and India.

We know that labor in these countries comes surprisingly cheap, but only a few know that some talents in these countries can actually compete with the workforce coming from the United States or from Europe.

It’s because the workers from Asia are able to learn and implement advanced manufacturing techniques in their operations, thus improving the quality of the products coming from them.

3. Production Capacity Increased

With more capital invested in the countries that have lower labor costs, it’s only natural for these companies to increase their production capacity too.

Simply put, more materials are built and produced, thus companies are now able to buy more materials when needed.

4. Technology Improved

With more money being invested in certain supplies or materials that are needed, product technology is also improved. More innovations are planned and built to help companies use the materials.  

Additional Disadvantages of Global Sourcing

While global procurement is an excellent way for companies to bounce back on the procurement processes during this time of health and economic anxiety, there are also a few disadvantages that global procurement may incur for the company:

Exposure to financial and political risks in different countries – A company that invests in sourcing from a different country for product manufacturing may also have to think about getting involved in financial and political problems in the said country. Companies that invest in building manufacturing plants in most third-world countries always seem to have issues with political issues and corruption problems.

Global procurement has hidden costs – Because of the different time zones and cultural differences, global procurement may incur hidden costs for the company. Take for example the difference in salary rates and working hours of the local workers versus the international workforce. The company should consider this carefully. 

Increased monitoring costs or logistics– Because products are manufactured in a different country, a company may have to think about rising monitoring costs, especially if the product is considered a valuable commodity. Think of how much money should be invested in the actual delivery of the product from one country to the next.

Shipping costs are already a big deal, since traversing the finished product from one continent to the next is always going to take some time. And today’s pandemic issue is also not going to help with this problem, since some countries where product manufacturing is outsourced are the ones that are hit the most by the COVID pandemic.

Should there be a huge need for the product, special arrangements must be made to ship or deliver the product from the factory to the stores selling the products. Which will take a lot of money to make it all work.

Why is Global Procurement Popular in 2025?

Global procurement is also known as global sourcing. It is the procurement strategy where an enterprise works to identify the most cost-effective location for creating supplies. It doesn’t matter if the location is found in another country; global procurement works perfectly in sync with identifying a good location for product manufacturing.

In the past, global procurement was already an idea put forward by CPOs and procurement directors who know that the Internet will pave the way for a revolution in the procurement industry. But since locally sourced supplies and materials were still considered cheap, that’s why no one bothered taking a second look at the idea.

And then enter the COVID pandemic. It was truly a dark time for business, as most companies suddenly shut down because the lockdowns prevented people from coming in to work. The same can also be said with procurement teams trying their best to do their work while also trying to keep themselves safe from contracting the dreaded virus. With global procurement now fast becoming a thing among companies, procurement teams now have a safer way to source materials that are coming from outside the country.

Procurement Expert’s Advice on Global Procurement

For this article, we asked a seasoned procurement professional to share his insights regarding global procurement.

Sjoerd Goedhart
Owner, Goedhart Interim Management & Consultancy

LinkedIn Profile: https://www.linkedin.com/in/sjoerdgoedhart/

1. Can you share a personal example of global procurement? What can readers learn from this?

“As a buyer for a large food retailer, I often source products on a global level. The reasons behind this are twofold: firstly, certain raw materials or products are only available in certain parts of the world, and secondly, there are cost advantages to be gained.

These cost advantages are mainly driven by the fact that certain producers are so large that economies of scale translate into a cost advantage despite additional costs such as transport. Through my experience, I have learned that when sourcing products, it is important to not only look at the cost price and additional costs but also to ensure that the supplier understands our business and our processes.

They must understand the dynamics of the local market and apply the same requirements about quality and processes. In certain countries, these requirements may not be as strictly organized, and as a result, a supplier may not fit into our process, which can lead to a lot of extra work.”

Follow-up Question: In your experience, how did you manage and build relationships with global suppliers to ensure they understood your business, processes, and local market dynamics?

“In my experience, managing relationships with global suppliers involves understanding cultural differences and aligning expectations. While face-to-face meetings are helpful, it’s essential to grasp the supplier’s way of doing business and adapt accordingly.

For instance, negotiation styles can vary widely between regions, so it’s crucial to dive into cultural nuances for effective communication. Additionally, ensuring alignment on standards and expectations, such as delivery schedules and product quality, is vital to avoid costly complications.

Ultimately, cultural sensitivity and adherence to agreed terms are key to successful global procurement relationships.”

2. What should readers know about global procurement?

“Through global sourcing, a company gets access to markets where products can be produced more cheaply, where specific raw materials are available, or where they are cheaper, or where qualified workers can be found.

But global sourcing not only has advantages, there are also risks involved that must be made clear and taken into account in the decision to source globally.”

3. What is the biggest misconception about global procurement? What do most people get wrong about it?

“My opinion is that the idea of achieving price advantages through global procurement may seem advantageous for a company. However, there are several other factors to consider that can have direct and indirect costs, making an attractive offer ultimately expensive.

Additionally, the risks associated with global procurement cannot be allocated to a specific cost per product, and should be taken into account when making the overall decision of whether or not to source globally.”

4. What are the unique challenges and opportunities in managing global procurement operations?

“Opportunities are making use of cost and/or economies of scale that exist in other countries and that are so big that it is more economical to produce or purchase the products there. Or the availability of qualified employees which are less available in the company’s existing production country.

The biggest challenges are risks associated in the sense of how strict the compliance with CSR regulations are and risks in political and economic instability in those countries which could impact the availability of products.”

5. How can organizations navigate the complexities of global procurement, such as cultural differences and regulatory compliance?

“By understanding the benefits and challenges of global sourcing, establishing relationships with suppliers, and monitoring and evaluating performance. It’s important to manage the risks. This includes assessing potential risks and understanding their impact on your business.

It also includes understanding the legal and regulatory framework in each country and having a plan for dealing with any potential problems.”

6. What skills do procurement professionals need to stay competitive in global procurement?

“The skills that every procurement manager must possess include negotiation, communication, market research, analytical ability, financial management, and strategic sourcing skills.

However, for global sourcing, it is essential to know about risk management, ethical sourcing, and supplier management. Along with these, excellent communication, adaptability, and management skills are also crucial.”

7. What should organizations keep in mind when trying to enter global procurement?

“They should consider the total impact of global sourcing, not only possible savings in production costs. But also, total costs including transport, storage, finance, cash flow impact, insurance, local production audits, quality, logistics capacity, and trade regulations.”

Conclusion

Global procurement is a strategic approach to procurement that allows companies to take advantage of lower production costs and a wide network of suppliers to improve the competitiveness, quality, and innovation of their supply chains. However, successful implementation of this model requires the organization to be large enough and financially stable to manage additional risks, such as political uncertainties, hidden logistics costs, and compliance with various international regulations.

Before opting for global sourcing, companies should conduct a thorough analysis of their own needs. They then need to define clear goals, build robust strategies and policies, evaluate and select reliable suppliers, and implement appropriate technologies for process automation and performance monitoring. Continuous risk management and process improvement enable the balance between savings and reliability to be maintained, thus ensuring the long-term sustainability and efficiency of the global supply chain.

Frequently asked questions

What is global procurement?

Global procurement is the practice of sourcing goods and services from suppliers located outside your home country. It involves identifying the most cost-effective suppliers globally to enhance efficiency, reduce costs, and access a wider range of products and services.

How can organizations effectively implement global procurement?

To implement global procurement successfully, organizations need to establish robust sourcing strategies, conduct thorough market research, and gather comprehensive data on potential suppliers. This process also includes assessing cultural differences, regulatory compliance, and logistics management.

What distinguishes global procurement from local procurement?

Global procurement focuses on sourcing materials and products from international suppliers, enabling companies to leverage global markets for cost advantages and specialized resources. In contrast, local procurement typically involves sourcing supplies from within the same country, which may limit options and cost-saving opportunities.

About the author

My name is Marijn Overvest, I’m the founder of Procurement Tactics. I have a deep passion for procurement, and I’ve upskilled over 200 procurement teams from all over the world. When I’m not working, I love running and cycling.

Marijn Overvest Procurement Tactics