11 Procurement Trends Set to Dominate 2025: Be Prepared

Procurement AI Software Growth Surges, Data Leak Concerns Follow

In 2025, more and more procurement teams will adopt AI-powered tools, marking a clear trend as major players like GEP and Zycus ramp up their investments in AI technologies.

With the launch of Merlin Assist and Merlin GenAI Power Apps, Zycus is empowering procurement teams to streamline traditionally manual and complex tasks, boosting efficiency while minimizing operational risks.

On the other hand, GEP has made a strategic move by acquiring OpusCapita, a leading e-invoicing and procurement solutions provider based in Helsinki, Finland. This acquisition allows GEP to combine OpusCapita’s strengths in the Nordic region, particularly in e-invoicing and AP automation, with GEP’s global AI-powered procurement platform, GEP SMART.

While AI adoption is accelerating, the “adaption” rate tells a different story, as concerns around data privacy and security are increasing.

Each interaction with generative AI leaves a digital footprint, raising the risk that sensitive information could be exposed or misused in AI model training. This presents a significant challenge, especially when proprietary data is involved.

A recent Cisco report highlights these concerns, noting that over 25% of companies have banned the use of generative AI tools altogether.

Additionally, 63% of respondents restricted the types of data employees could input into these systems, while 61% limited the AI tools that could be used. The primary worry is that employees might unknowingly leak confidential information to external platforms.

These privacy risks are already central to legal disputes, such as The New York Times’ lawsuit against OpenAI, which alleges that its articles were used without permission to train AI models.

As a result, privacy and data security have become top priorities for many companies, and there’s growing support for stronger legislation. Businesses now see investment in privacy safeguards as a necessity, with the potential benefits far outweighing the risks.

AI Implementation While Ensuring Data Privacy

To ensure a seamless adaption rate of AI in procurement while addressing concerns over data leakage, here are five key steps to help integrate AI while keeping your data secure.

The first step is to Encourage Safe AI Experimentation in Procurement. Companies must build a culture where procurement teams feel empowered to explore AI-driven solutions, all while ensuring strict compliance with data privacy regulations.

The second step is to Implement Comprehensive AI Training for Procurement Professionals. Procurement teams must be equipped with the skills and knowledge to use AI effectively. This training should focus on data security, responsible AI usage, and understanding potential risks. 

Additionally, businesses should also listen to employees’ concerns and provide the support, guidance, and resources they need to adapt successfully to AI.

The third step is to Develop a Clear AI Strategy Aligned with Procurement and Data Privacy Goals. Businesses should ensure that their AI strategy aligns with procurement objectives while addressing data privacy concerns. This includes creating policies that promote ethical AI use, with a focus on accountability, transparency, and responsible interactions. For this, you need to ask yourself a question. Does your business have a policy on how to use AI in Procurement?

Let’s look a great example is Salesforce Inc., which has developed an AI Acceptable Use Policy (AI AUP) to uphold ethical standards and protect its customers. Their AI AUP prohibits AI use for activities such as making legally binding decisions, political campaigns, and other harmful or deceptive practices. By regularly updating its policy, Salesforce ensures customers are well-informed about the guidelines and consequences of noncompliance, enabling safer and more responsible AI usage.

The fourth step is to Address Job Displacement Fears with Transparency. The organization should openly communicate the changes AI may bring to procurement roles and emphasize how AI will enhance, rather than replace, human expertise. By integrating privacy protocols into these discussions, companies can maintain trust and transparency.

Lastly, Lead Continuous Learning and Innovation in Procurement. Businesses, along with procurement professionals, should stay up to date with AI developments and data privacy regulations, fostering a culture of ongoing learning and innovation in procurement, while protecting sensitive data throughout the process.

By implementing these five steps, businesses can ensure that procurement professionals successfully adapt to AI integration while maintaining data security. This approach safeguards all stakeholders within the company, particularly protecting sensitive information like strategic plans from any risk of data leakage.

Procurement Professionals Struggling to Adopt AI

A study by Gartner warns that procurement organizations that fail to adopt AI will face a “cost and agility deficit.” Automating repetitive tasks frees up procurement teams to focus on value-added activities that lead to better business outcomes.

According to Statista, more than half of the global supply chain industry is expected to adopt AI by 2025. This makes addressing the issue of skill mismatches even more urgent.

This shift also aggravates job security concerns among procurement professionals. As companies continue to automate and integrate AI tools without investing in upskilling their existing teams, they may be forced to replace employees who cannot adapt. 

Furthermore, businesses might find it more cost-effective to hire new talent rather than invest in improving the skills of current staff, seeking a quicker return on investment.

Strengthen Skills-Based Hiring and Professional Development

To help procurement professionals adapt to AI and address related challenges, companies must shift their focus from traditional degrees and qualifications to skills-based hiring. 

This approach will not only enable new professionals to navigate the drastic changes brought by automation but also ensure that businesses invest in continuous professional development.

For existing procurement professionals, identifying a clear skills taxonomy is important. This taxonomy will outline the strengths of the current workforce and highlight areas for improvement, allowing teams to better leverage automation and advanced technologies. 

Additionally, investing in ongoing learning programs focused on upskilling will provide both technical AI-related skills and essential human skills like critical thinking and creativity, ensuring a competitive advantage in the evolving procurement landscape.

Processes Remaining Human in Procurement Automation

Procurement has long been a relationship-driven activity. While certain processes can be automated, building long-term opportunities with suppliers relies on establishing emotional connections. This is especially true for negotiation, which requires understanding human nuances, gestures, and cultural differences to achieve successful outcomes.

AI is undeniably transforming the way we work, acting as a game-changer for many businesses and helping them thrive. However, as we continue to embrace this wave of AI, we must acknowledge its downsides. The more we rely on AI tools, the less we cultivate meaningful connections that can further enhance business success.

While AI can accomplish a great deal, it cannot replicate the essence of real relationships. It lacks empathy, cannot read social cues, and is incapable of building trust—qualities that only humans possess.

Milan Emadi, founder and CEO of DreamSofa, emphasizes the importance of strong relationships throughout the supply chain. He notes that disruptions can happen at any moment, which is why focusing on building these relationships is crucial. Each component of the supply chain must work in harmony for the system to function effectively.

Moreover, negotiation and supplier relationship management (SRM) are vital for strengthening the supply chain through meaningful supplier partnerships. Since AI cannot fulfill these roles, procurement managers must prioritize these areas to keep human connections intact within the procurement process. 

Improve the Human Side of Procurement

To help procurement teams improve their negotiation and supplier relationship skills, companies must empower them with training and development programs that enhance their soft skills. This investment will enable teams to connect more effectively with suppliers and build strong, lasting relationships.

Additionally, procurement managers can share valuable insights from their own experiences in preparing for negotiations. By guiding teams on how to communicate their position clearly and respectfully—avoiding gestures or actions that could offend—they can also help strengthen their teams’ relationship-building abilities.

Furthermore, businesses need to recognize that human connections are key to long-term success—something no AI can replicate. In a world where automation is on the rise, it’s the human touch that will continue to drive innovation, trust, and strong partnerships.

AI Hype Is Reaching Its Breaking Point

It’s no surprise that AI adoption is already widespread. One of the latest evolutions, Generative AI (GenAI), popularized by ChatGPT, has been in the spotlight since its release. 

Why? Because, like other GenAI tools, it can generate new content such as numerical data, images, text, audio, or video based on the data it’s trained on. 

This year, according to EY, around 40% of supply chain organizations are investing in GenAI, focusing on knowledge management applications.

However, some large companies have a more cautious view. Goldman Sachs, for example, recently published a report titled “Gen AI: Too Much Spend, Too Little Benefit?” after introducing generative AI tools across its workforce. The report reflects concerns about high costs and immediate return on investment.

A report by Zycus, in partnership with Procurement Tactics, found that 69.8% of organizations have yet to adopt dedicated AI software. However, user engagement levels suggest a positive outlook on AI’s transformative potential in procurement.

That said, AI, including generative AI products like OpenAI’s ChatGPT or Google’s AI, isn’t going away anytime soon. But for now, AI companies are burning through cash without delivering a product that’s easily monetizable and error-free, fueling concerns for many businesses about whether to fully embrace AI or not.

Adopt an AI Growth Mindset Amidst The Doubts

Despite lingering doubts about AI, it’s clear that many businesses have committed to it, with procurement increasingly integrated with AI tools to boost productivity.

For procurement professionals new to AI, developing an AI growth mindset starts with the practical integration of Generative AI (GenAI) into daily tasks. This includes fostering a mindset of experimentation, using AI to solve problems and make decisions, while keeping a human expert in the loop.

To eliminate doubts, procurement professionals should analyze AI performance and outcomes to ensure the technology meets productivity and quality standards. Regular evaluations and adjustments can optimize AI’s effectiveness, expanding its application across various tasks while keeping aligned with organizational goals.

By adopting this mindset, even if the AI bubble bursts, the skills gained from using AI tools will remain invaluable in the digital age. As new technologies emerge, these skills will continue to enhance business operations in the coming years.

Regardless of whether AI is overhyped, businesses should still adopt it, as the rapid evolution of technology is continuously reshaping how industries operate, as we’ve already seen in procurement. 

Aging Workforce and Talent Gaps in Procurement

As more people of retirement age continue working in procurement due to financial instability, companies may need more talent when these experienced professionals eventually leave the workforce.

This heavy reliance on older workers can hinder effective knowledge transfer, leaving procurement teams with skill gaps, especially since younger generations are slower to enter the field.

Additionally, research shows that stereotypes about older workers being outdated, inflexible, or less productive can harm their job satisfaction and productivity. These negative perceptions can affect their sense of belonging, self-esteem, and access to development opportunities, ultimately impacting overall productivity in procurement.

Creating Strategies that Bridge Different Generations

To tackle these challenges, companies must focus on retraining and reskilling their entire workforce, spanning multiple generations. According to Bain, 22% of workers aged 55 to 64 feel they need more tech skills. 

To address this, companies should develop training programs that align with older employees’ interest in meaningful work while encouraging supervisors to engage staff across all age groups.

Businesses should also implement continuous learning programs to help older workers in procurement stay competitive while fostering mentorship between more experienced and newer employees. 

Pairing seasoned professionals with younger procurement professionals for mutual skills-sharing, along with offering workshops tailored to different career stages, helps bridge the skill gap and ensures procurement remains agile and effective.

Additionally, companies can tap into the hands-on knowledge of older employees to help upskill younger talent. The practical insights gained through years of experience are invaluable for applying knowledge to real-world procurement scenarios.

By embracing these strategies, companies not only enhance the skills and capabilities of their current workforce but also foster innovation, teamwork, and long-term success in procurement. 

This approach creates an environment where employees of all ages can continuously grow and contribute, positioning the company to attract and retain talent across generations within procurement.

Shortage of Young Talent in Procurement

The reluctance of younger professionals to pursue careers in procurement could worsen talent shortages, especially as older professionals approach retirement. 

Procurement has long been viewed as a traditional field and often lacks visibility, making it less attractive to Gen Z compared to more dynamic sectors like tech, which is currently booming. As Gen Z leans towards tech roles or blue-collar jobs, procurement teams may struggle to bring in the fresh talent needed to drive digital transformation and innovation.

This shortage of young talent could disrupt the overall procurement process. While many older professionals remain in the workforce, the question remains: who will replace them? 

If organizations fail to address the talent gap, progress in adapting procurement to new technologies could be lost, leaving no new generation to take on and apply the necessary knowledge and skills. This failure could lead to a significant lack of workforce in the future, jeopardizing the effectiveness of procurement practices as experienced professionals retire and fewer skilled workers enter the field.

Rebranding Procurement

To tackle this challenge, organizations must rebrand procurement as a forward-thinking business function that embraces new technologies and promotes sustainability.

As procurement becomes increasingly integrated with AI and advanced tools, companies need to increase the visibility of procurement’s role in business. This will help Gen Z and millennials become aware of the field, sparking interest in procurement as a career path.

According to a Deloitte survey, nearly 9 out of 10 Gen Zs and millennials consider purpose one of the factors to job satisfaction and are more likely to reject work that doesn’t align with their values.

Therefore, businesses should prioritize sustainability in their procurement processes to attract younger generations, who are more likely to engage with organizations that value social and environmental responsibility.

Additionally, companies can implement grassroots talent initiatives by engaging with local communities and educational institutions to access new-collar and blue-collar talent pools in procurement.

These initiatives help identify and connect with skilled workers who may be uncertain about their career paths but possess valuable skills applicable to procurement.

By taking these steps, businesses can address the declining interest among younger talents in procurement. By introducing procurement in a way that resonates with them, companies can ensure their procurement processes remain supported by a new wave of young talent.

Imbalance Between Strategy and Execution Hurts Procurement Performance

An imbalance between strategy and execution can significantly disrupt procurement performance. Effective procurement not only requires a well-crafted strategy but also the ability to execute it seamlessly. When organizations fail to bridge this gap, they expose themselves to risks that can impact profitability and hinder growth.

American Productivity & Quality Center (APQC) emphasizes that procurement success relies on the practical execution of essential activities, not just strategic planning. Without focusing on execution, even the most robust strategies can fail. Poorly implemented policies lead to increased risks and strained supplier relationships, making it difficult for companies to stay agile in a fast-changing market.

Additionally, procurement cannot function well without working with other departments. If a department doesn’t clearly communicate its needs to procurement, it can lead to disruptions that affect the entire business. To avoid this, all departments should close the gap in their strategies and involve procurement early on to ensure smooth execution.

To overcome these challenges in 2025, organizations need to empower their procurement teams with the skills and resources to achieve a balance between strategic vision and operational execution. This balance is crucial for adapting to ongoing shifts in procurement and maintaining a competitive edge.​

Equip Procurement Teams with the Right Skills for Smart Execution

Given the multitude of challenges that procurement teams face—such as global conflict, inflation, and the lingering impacts of the pandemic—it’s understandable that much of their focus has been on immediate execution, addressing risks as they arise. 

However, to ensure that procurement processes stay resilient and minimize risks, businesses must focus on developing the right skills within their teams to close the gap between strategy and execution.

It’s not enough to just adopt new technology. Companies must also ensure their procurement professionals have the expertise to manage policies and processes effectively.

By doing so, procurement teams can not only handle current challenges but also grow stronger with the support of the business—demonstrating that overcoming obstacles leads to growth. 

Fostering collaboration with top management and other departments is essential to align procurement with broader business strategies. Procurement is more than just purchasing; it should be involved in every aspect of the business. 

Therefore, it’s crucial for procurement teams to effectively communicate and understand the needs of other departments, bridging the gap as business strategy encompasses everyone.

In short, businesses that invest in both the strategic and operational skills of their procurement teams will be better prepared to adapt and succeed in an increasingly uncertain environment, especially in 2025.

Value-Driven Procurement

According to McKinsey, procurement’s greatest opportunity lies in moving beyond cost control to harnessing its in-depth knowledge of supply markets and the value chain. 

This evolution positions procurement to play a critical role in reshaping and optimizing the upstream value chain, maximizing value through closer collaboration with suppliers at all levels.

One Chief Procurement Officer (CPO) from an industrial firm explained to McKinsey that the role of the CPO has evolved into that of a “chief partnership officer.” 

This new role involves not only managing supplier relationships but also building stronger alliances across internal functions and business units. 

By acting as a knowledge broker, procurement is now responsible for creating value through collaboration within the company and with external partners.

Today, procurement teams continue to face pressure to mitigate the effects of inflation. As a result, many Chief Procurement Officers are seeking ways to transform their teams into more strategic, growth-oriented functions. 

By embracing these challenges as opportunities for improvement, procurement can evolve into a key driver of organizational success.

Focus on Value Creation

In 2025, procurement will need to prioritize value creation, driven by the goals of boosting revenue, strengthening supplier relationships, and addressing risks that could disrupt the procurement process. 

To achieve this, businesses must define what value means in the context of procurement while ensuring that it has a strategic impact that streamlines operations.

A recent EY survey highlights that cost management ranks as a top priority, second only to effective cash management, in today’s market. According to the survey, 70% of general partners (GPs) in private equity firms focus on cost reduction “somewhat” or “significantly” more than usual.

Moreover, many firms have found success by nearshoring, which reduces transportation costs, shortens lead times, and improves both quality control and flexibility. They have also renegotiated contracts and leveraged advanced procurement analytics to optimize spending.

This underscores the vital role procurement plays in helping businesses generate value through more efficient and strategic processes.

Poor Risk Management Weakens The Supply Chain

With the many challenges procurement faces today, companies that do not prioritize risk management leave themselves exposed to supply chain disruptions.

Without a clear strategy to mitigate or manage these risks, businesses can face significant financial losses, with some firms potentially losing over 40% of their annual profits due to disruptions, according to Economist Impact.

By focusing only on efficiency instead of building resilience, companies increase their risk exposure, putting both profitability and long-term stability at risk.

Enhance Procurement Risk Management

Procurement plays a crucial role in fixing supply chain issues. Companies that optimize procurement through new technologies can gain better visibility. 

As Michael Klinger, Siemens’s senior director of supply chain excellence, explained to the Harvard Business Review, “Technology doesn’t provide complete visibility to prevent supply disruptions before they occur, but it can offer information that helps you respond to disruptions much faster than human buyers can.”

Moreover, businesses need to actively enhance risk management by diversifying their supplier base and building stronger, more reliable partnerships. 

Diversification reduces dependency on a single supplier while fostering trust with key suppliers making it easier to handle disruptions. Reliable suppliers are especially important during times of tension, helping to avoid the risk of running out of products. 

By focusing on procurement risk management in 2025, organizations can better prepare for future challenges and maintain stability.

Enhanced Value Optimization Through Category Management

As we’ve seen throughout 2024, businesses are becoming more curious about category management, a trend that we expect to continue into 2025 and beyond. But why is this happening? The answer lies in the evolving role of procurement in today’s complex environment.

Procurement-driven value creation is now a key component of business strategies, with procurement teams leading efforts to navigate price fluctuations, supply chain disruptions, inflation, geopolitical tensions, and increasing sustainability regulations.

At the core of this shift is category management—a strategic approach that helps businesses manage goods and services across multiple categories, driving significant cost savings and more informed decision-making.

According to research by EY, category management can deliver 10-15% in cost savings, improved supplier relationships, and more data-driven procurement decisions. Yet, common barriers such as manual processes, governance challenges, and lack of data can hinder its full potential.

Boosting Category Management Efficiency with Technology

For category management to be successful, companies need to establish a framework that effectively utilizes advanced technologies to enhance collaboration and maintain strong oversight. 

These two aspects are critical for the success of category management, which can be achieved by selecting and implementing a centralized technology solution that facilitates collaboration and teamwork among procurement teams.

Moreover, having access to real-time and accurate data is important for category management. This data allows procurement teams to gain deeper insights into how they can strategize their categories despite the ongoing market fluctuations.

Additionally, companies should actively support these initiatives by investing in programs that enhance the skills of their procurement teams. Enrolling in category management training or programs that focus on the latest technologies and best practices in category management will promote continuous skill development and adaptability.

Increased Pressure on Businesses to Embrace Sustainability

As we approach 2025, businesses are under increasing pressure to fully embrace sustainability, driven by both industry peers and societal demands. 

Many companies are now prioritizing sustainability, not only for its financial potential but also to meet the expectations of employees seeking more purposeful work.

A report by EY highlights how sustainability has become a core corporate strategy for many, pushing other businesses to follow suit. 

Additionally, Deloitte and Workplace Intelligence found that 80% of CEOs feel pressure to enhance human sustainability, further prompting companies to rethink their strategies to align with these growing demands.

Businesses that do not adapt risk falling behind in an era where sustainability is no longer optional but essential for success.

Genuine Sustainability Commitment Over Greenwashing

In today’s era of sustainability, some companies claim to be environmentally responsible but fall short in practice. When businesses “greenwash” their efforts, they risk backlash from consumers, which can damage their brand’s reputation. 

Many companies struggle to find the right balance between being sustainable and maintaining high profit margins, leading them to exaggerate their eco-friendly initiatives. This pressure to deliver profits can push them toward greenwashing, ultimately undermining their credibility and trust with consumers.

Take Unilever, for instance. The company had originally pledged to cut its use of virgin plastic in half by 2025 but has since scaled that back, now aiming for only a one-third reduction by 2026. 

It also planned to ensure all suppliers were paid a “living wage” by 2030, but now the goal is limited to suppliers that account for just half of its spending by 2026.

This shift reflects growing pressure on companies like Unilever to prioritize profits over environmental or social goals. This is no surprise that this hasn’t gone over well with consumers. Groups like Greenpeace have strongly criticized Unilever, saying the company isn’t doing enough to reduce the harmful impact of its plastic waste.

The lesson here is clear: if a business promises to commit to sustainability, it should follow through—not just for appearances.

Now, let’s look at a brand that is genuinely committed to sustainability: The Hershey Company. Hershey is working to expand its already 100% independently verified cocoa supply chain by ensuring full sourcing visibility for its cocoa volumes in the Ivory Coast and Ghana by 2025, according to its latest ESG report.

Also, Hershey is making progress in sustainably sourcing its other key ingredients, having already achieved 86% of its goal to source everything sustainably by 2025.

Hershey’s commitment to sustainability isn’t just talk; it’s a clear example of how large companies can genuinely engage with environmental responsibility. 

This level of dedication not only earns the trust of consumers but also enhances the brand’s reputation, proving that a true commitment to sustainability is possible and beneficial.