“As we stand here at the start of 2025, it's clear that this moment isn't about minor tweaks or incremental gains. It's about embracing fundamental shifts that challenge our long-held assumptions.” - Philip Ideson, Founder and Managing Director of Art of Procurement
As I write this annual letter to the procurement community – an end-of-year tradition since 2018 – I find myself thinking about how much has changed in the 10 years since Art of Procurement was launched. From that nervous first podcast recording, our team has had hundreds, if not thousands, of conversations with procurement and supply chain leaders, subject matter experts, and AOP community members.
Every year has brought unique challenges and opportunities, but there’s something about 2025 that feels… different. Yes, I still feel hopeful about the new year ahead, with all the uncertainty and change it will likely bring, but there are some stark realities we have to face.
Procurement is standing on a precipice, an inflection point, where individual roles, processes, and even procurement’s core purpose are being redefined right before our eyes. Advancements in technology, economic pressures, and shifting business needs have made it clear: procurement transformation isn’t on the horizon – it’s here now, and it demands our immediate attention if we’re to emerge intact and, hopefully, even stronger.
Based on all of the conversations I had last year, I have identified five important trends that seem to be on everyone’s mind and that paint a very clear picture of what’s ahead for procurement in 2025 as well as my thoughts on how procurement can thrive in this new reality.
5 Key Trends for 2025
‘Doing More with Less’ Is Here to Stay
In 2024, we talked with Samir Khushalani, the Global Procurement Operating Model and Source-to-Pay Service Line Leader at McKinsey and Company. Samir shared that McKinsey has seen a 50 percent increase in spend under management by buyers over the past five years. At the same time, they anticipate that the size of the typical procurement team will be reduced by 25-50 percent. This is an opinion I’ve heard from many procurement leaders. All the signs point to the fact that there’s no relief coming in terms of extra headcount, but procurement’s scope will increase all the same. It won’t be enough to find a way for procurement to become more efficient within their current operating model; they will have to rethink the model altogether. (Stay tuned for my interview with Samir in the coming weeks.)
AI Is Definitely Here to Stay
While every company or team might be at a different maturity point in their AI journey, it will clearly be a key focus for procurement leaders in 2025 (and beyond). We’re moving beyond generative AI into “agentic” AI, where AI systems can autonomously execute tasks and interact with other AI systems. At the end of 2024, Mary Purk shared a study from AI at Wharton that showed procurement leads other business functions in their adoption of AI, but we rank near the bottom in perceiving its positive impact. This is a disconnect that has to be addressed, and perhaps it points to procurement’s underlying insecurity about what procurement value creation looks like with AI.
Process-Driven Activities Will Be Automated
For several years, procurement has relied on rigid frameworks and processes, especially in sourcing, often as a substitute for true supply market insights. Process can be a good distraction when deep market insights aren’t within procurement’s reach, but our new reality in 2025 means that any activity that’s primarily driven by process is ripe for semi or full automation. It’s not about eliminating procurement’s role in driving processes, but rather evolving past it so we’re able to focus on higher-order tasks and strategic value creation.
A Return to Stakeholder-Led Buying
We’re in the midst of a shift toward ‘invisible procurement’ where the buying process moves back to the stakeholders. As tasks become more automated, procurement might lose some of their visibility because stakeholders are getting what they need directly through advanced platforms. The procurement process will still exist, but it will be concealed behind orchestration tools and AI agents.
In my view, this isn’t the death knell for procurement. Far from it. In fact, procurement needs to be the function leading this change and making a clear delineation between purchases where procurement is largely invisible versus those categories of spend that still very much require human leadership and procurement’s strategic input.
Geopolitical Changes Create Tailwinds for Procurement
Shifting trade policies, regulatory uncertainty, supply disruptions, potential inflation, and, last but not least, looming new tariffs have given us a sense of heightened caution and volatility. We don’t know exactly how all of these things will play out in 2025, but we know it’s coming. I think this is good news for procurement. All of this geopolitical and macroeconomic uncertainty will thrust procurement into the spotlight for the business, increase the work to be done, and strengthen the potential impact of procurement and supply chain professionals.
Who is procurement in 2025?
When we think about all of the changes afoot, it becomes clear that procurement has to rethink their operating model and the differentiated value their human talent and expertise offer to the business.
I see four critical roles for procurement emerging in 2025:
We Are Market Interpreters
AI might be able to gather data faster than any human, but we have to contextualize that intelligence within the broader ecosystem of geopolitical risk, technological innovation and disruption, and the evolving needs of the business. We need real people who can translate data into meaningful strategies.
We Are Relationship Architects
As procurement moves away from category-centric models, we need to think beyond the immediate transaction and coalesce people who can design and maintain complex ecosystems of suppliers, partners, and stakeholders. Procurement is the key orchestrator of these relationships, and the active part they play in nurturing valuable relationships for the business is and will continue to be a huge source of value.
We Are Overseers of Ethics, Risk, and Compliance
Whether we’re talking about responsible sourcing, ESG compliance, or supplier diversity, human judgment and leadership remain irreplaceable. AI might be able to trigger a risk alert for us, but deciding how to weigh trade-offs, ensure compliance, and maintain the ethics of the business requires a real human to step up and take the lead.
We Are Business Strategists
Big-picture thinking about positioning, navigating risks and trends, integrating insights, and strategic goal setting requires human expertise. This creates ample opportunity – and roles – for procurement to contribute in ways that are invaluable to the business.
The Path Forward
Everyone’s starting point with transformation, operating models, and AI is different. Regardless of where your organization is on that journey, progress begins with small, deliberate steps that accumulate and gain momentum over time.
As we progress into 2025, I encourage you to keep a few things in mind:
- Don’t be afraid to challenge your assumptions about what procurement is or can be.
- Experiment with new technologies and move up the maturity ladder, wherever you are.
- Double-down on procurement’s human-centric capabilities, and make sure the business knows what those are.
- Take every opportunity you can to learn from colleagues who are one step ahead of you on the same journey
To help you, Art of Procurement is expanding our resources with even more content and events in 2025, including a newly launched website and resource center to make the tools and knowledge you need even more accessible. We’re also hosting our first executive in-person event, Catalyst LA, on May 6th, focused on helping executive procurement leaders rethink their operating models.
Here’s to a transformative year ahead for all of us!
Happy New Year!
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