Procurement is entering a transformative era—one defined by sustainability, digital innovation, and the need for unwavering resilience. No longer confined to cost optimization, procurement now serves as a strategic pillar, shaping the future of supply chains in an increasingly volatile world. Sustainability has moved from aspiration to necessity, with organizations expected to uphold ethical sourcing, reduce environmental impact, and align with evolving ESG mandates. Simultaneously, cutting-edge technologies—AI, blockchain, and predictive analytics—are revolutionizing procurement, offering deeper insights, enhanced transparency, and unparalleled agility. Yet, as global disruptions become the norm, supplier resilience has emerged as a defining factor in business continuity. Forward-thinking procurement leaders must cultivate adaptive, collaborative supply networks to mitigate risks and seize emerging opportunities. This Special Report delves into the next frontier of procurement, exploring how sustainability, technology, and resilience are reshaping the landscape—and how organizations can harness these forces to build a future-ready supply chain.
Procurement, in the current parlance, is no longer just about cost savings; it has become a key driver of business strategy, resilience, and innovation. Companies are shifting from transactional sourcing to long-term value creation, balancing cost efficiency with risk management and supplier collaboration. The COVID-19 pandemic exposed the fragility of global supply chains, highlighting the need for stronger supplier relationships and business continuity planning. Organizations are moving away from cost-focused supplier selection to prioritizing reliability, innovation, and long-term partnerships. Supplier development and risk assessment have become essential to ensuring supply chain stability.
Procurement is also gaining recognition as a strategic leadership function. Once considered a back-office operation, it is now influencing corporate decision-making, with procurement professionals moving into executive roles such as Chief Procurement Officers (CPOs) and even CEOs. As businesses continue to recognize the importance of procurement in driving growth and resilience, its influence at the highest levels of leadership will only increase.
As World Economic Forum post aptly mentions, “With the dust settling on key international negotiations at the United Nations Climate Change Conference (COP29) and Biodiversity Conference (COP16), it has never been clearer that businesses need to lead the charge on implementing innovative solutions to promote greener production and consumption models that protect our climate and environment. Procurement can play a critical role in this mission, thanks to its position spanning operations and supply chains.” In short, the role of chief procurement officers (CPOs) has gone far beyond the traditional ‘Better, Cheaper, Faster’ job description. Green procurement, which once felt aspirational, is now a key lever to achieve global climate and environmental goals. Today’s CPOs must step up to drive the systemic transformation needed to build green and resilient supply chains and secure a more sustainable future.
Here’s a deep dive into the changing landscape of procurement through expert insights on how leading companies are adapting. Let’s explore how organizations that embrace technology, strengthen supplier collaboration, embed sustainability, and elevate procurement to a strategic level are building agile, future-ready supply chains that drive long-term success.
How do you view the transformation of the procurement function over time?
Ajay Kumar, Chief Purchasing Officer, MT-AutoCraft: In my experience, procurement in the automotive industry is undergoing a rapid transformation, driven by increasing volatility, supply chain disruptions—such as the semiconductor shortages of early 2020—rising costs, and stringent government regulations like BIS on steel. These challenges are reshaping the procurement landscape, demanding a more strategic and adaptive approach. To navigate this evolving environment, procurement must go beyond traditional sourcing. The focus should be on building resilience, fostering strategic partnerships, and harnessing advanced technologies like AI and ML to enhance efficiency and decision-making. The role of procurement is now pivotal in driving innovation, optimizing supply chains, and ensuring long-term sustainability, making it a cornerstone of a future-ready automotive industry.
Ashish Mendiratta, Founder, Advanchainge Pvt Ltd.: Looking back a decade, the primary focus in procurement was on cost optimization—finding ways to reduce total costs and gain a competitive edge. However, over the past few years, especially post-COVID, there has been a significant shift in priorities. Today, cost is no longer the sole consideration. Organizations have realized that chasing the lowest cost often comes with hidden costs, making it an unsustainable strategy in the long run.
Ashish Mendiratta
Instead, companies are now taking a broader, more strategic approach to procurement contributing to triple bottom line i.e. Profit, Planet and People. They are seeking ways to formulate comprehensive procurement strategies and train their teams to think beyond transactional processes. A key transformation is the increasing adoption of technology in procurement. While the supply chain downstream side has been ahead in leveraging digital solutions, procurement has traditionally lagged. However, this gap is now closing as companies actively explore technological advancements.
Another major trend is the growing emphasis on supplier collaboration. At Advanchainge, we emphasize four key pillars of sourcing: Demand Management; Total Cost Management; Supplier Relationship Management; and Risk Management. Among these, supplier relationship management and risk management have become top priorities for organizations. Companies are now focused on building procurement solutions that are resilient and future-proof, having learned critical lessons from the disruptions caused by the pandemic. Going forward, these trends will continue to evolve, shaping a more strategic, technology-driven, and collaborative procurement landscape.
Anoop Bansal, Co-founder, UNPAUSE Consulting Pvt. Ltd.: The Procurement has evolved and transformed significantly in last few decades. From the days of just being purchasing – which involved minimum three quotes and select supplier based on least cost quoted, it is now very strategic function and involve multiple dimensions in addition to cost optimization e.g. Category Management, Commodity Risk Management, Driving Innovations in both products and processes, Leveraging Technology, Focus on Sustainability & Responsible Sourcing, Supplier Relationship Management, Business Continuity by building resilience across Supply Chain. Even cost optimization is more focused on driving productivity with levers which are sustainable & involves structural changes. The Sourcing & Procurement function has become a strategic function and a partner to business.
What are the various facets / aspects of sustainable procurement?
Anoop Bansal: Sustainability in Procurement is very important aspect currently. As the focus is increasing on ESG across the organizations, Procurement function has increasing responsibility to select its suppliers based on their current practices being sustainable and also their willingness to adapt to practices as desired. Procurement also needs to check multiple tiers backward (suppliers to supplier) for the compliance, hence it is important to select suppliers who give similar importance to sustainability & responsible sourcing and are also willing to learn & adapt the desired framework in their supplier selection process as well to ensure compliance across extended supply chain.
How can sustainability be effectively managed across the extended supply chain?
Ajay Kumar: Sustainability in the extended supply chain has become a fundamental priority for businesses striving for long-term growth while minimizing environmental and social risks. Organizations are no longer evaluating suppliers solely based on quality, cost, delivery, development, and management. Instead, sustainability has been integrated into this framework, evolving it from QCDDM (Quality, Cost, Delivery, Development, and Management) to QCDDMS, where sustainability is now a critical pillar in supplier selection and procurement strategies. This shift reflects the growing recognition that businesses must take responsibility not just for their own operations but for the entire value chain.
As companies embrace sustainable procurement, they are focusing on critical factors such as energy efficiency, waste reduction, ethical labor practices, and responsible sourcing. Suppliers are now assessed on their ability to minimize their carbon footprint by adopting renewable energy sources, optimizing resource utilization, and implementing waste reduction strategies. Ethical labor practices have also gained prominence, ensuring fair wages, safe working conditions, and strict adherence to human rights standards. Sustainable sourcing is another vital aspect, where organizations prioritize suppliers that use responsibly sourced materials, reducing reliance on scarce or environmentally harmful resources.
The role of technology in driving sustainability across the supply chain cannot be overstated. Companies are increasingly leveraging digital tools such as blockchain for supply chain transparency, AI-driven analytics to optimize energy use, IoT sensors to monitor real-time emissions, and digital twins to simulate and enhance supply chain efficiency. These technologies provide the visibility and insights necessary to make informed decisions, ensuring that sustainability efforts are embedded at every stage of procurement and logistics.
Beyond regulatory compliance, integrating sustainability into procurement delivers significant business benefits. Companies that actively build sustainable supply chains mitigate risks associated with regulatory fines, supply disruptions, and reputational damage. Long-term cost savings are realized through reduced energy consumption, lower waste management expenses, and optimized logistics. Moreover, sustainability initiatives enhance brand reputation, attract ESG-focused investors, and align businesses with evolving consumer preferences for ethically sourced products.
By transitioning from QCDDM to QCDDMS, organizations are making sustainability a core component of their procurement strategy rather than an afterthought. This transformation ensures that businesses not only achieve their economic goals but also contribute positively to society and the environment. A future-ready supply chain is one that is resilient, ethical, and sustainable, paving the way for a more responsible global supply chain ecosystem.
Anoop Bansal: It is important to create supplier engagement & awareness towards focus on sustainability in their operations as well the way they select their suppliers. Additionally, a framework of process audits needs to be developed and implemented to ensure periodic health check and corrective actions are initiated as and when needed. To manage and drive sustainability across supply chain, the framework also needs to keep evolving based on learnings on the way.
How are you leveraging technology, and how do you see your suppliers adapting to emerging technological trends?
Ajay Kumar: The full-scale implementation of AI and ML is still on the horizon, but we see a clear shift toward technologies that offer immediate, tangible benefits. For instance, the automotive industry is rapidly adopting automated vision inspection methods for improved quality control, advanced ERP systems for integrated data and streamlined operations, and IoT solutions for real-time data monitoring. These transformations are reshaping the way we manage production, quality, and supply chain efficiency.
One of the key initiatives I have come across is a finished goods monitoring portal. Traditionally, supply chain visibility was a major challenge. If there was a defect in a critical component, it could disrupt the entire production line. For example, if a leading OEM encountered a defect in a specific part, they might not be able to manufacture Model A as planned the next day. Instead, they would have to adjust production schedules and compensate with an alternative vehicle model. Previously, managing these fluctuations required constant manual communication with suppliers—calling them to check stock levels and confirm whether they could meet sudden increases in demand.
To overcome this inefficiency, the OEM developed a real-time finished goods monitoring platform, where suppliers proactively update their stock availability. This gives the buying team instant visibility, eliminating the need for calls and guesswork. If production schedules need to be altered, they can make data-driven decisions immediately, optimizing resources and minimizing downtime. This level of automation and real-time supply chain management is a game-changer, allowing the industry to adapt quickly to disruptions while maintaining efficiency.
These are just a few examples of the technology-driven transformations shaping the automotive industry today. Moving forward, the expectation is not just for internal adoption of digital solutions, but also for suppliers to embrace these innovations and become more agile, data-driven, and collaborative in their operations.
Anoop Bansal: With current global environment of very high volatility due to various factors e.g. geo-politics, macro-economic environment and high commodity inflation, it is imperative that procurement function leverages emerging technologies like Artificial Intelligence (AI)/Machine Learning (ML) to have processes with flexibility & improve responsiveness to be able to adapt & react with agility as per business requirement. Procurement leaders will need to engage with suppliers to improve awareness on benefits of adapting emerging technologies and train them if needed to ensure supplier eco-system is at similar level of adoption to make it truly effective collaboration.
From your industry's perspective, given your robust supplier selection process and existing supplier base, how do you encourage them to adopt sustainable practices, and how do you measure their progress?
A resilient supply chain is not just about risk mitigation; it’s also about building strong, collaborative relationships with suppliers. Companies should invest time in cultivating long-term partnerships that foster open communication and mutual trust. By working closely with suppliers, businesses can improve their ability to anticipate and manage disruptions, jointly develop contingency plans, and share critical information in real time to resolve problems faster. he ability to adapt quickly to changes in market conditions, consumer preferences, or global events is a hallmark of a resilient supply chain. This requires flexibility in both production and logistics. Businesses must have contingency plans in place to pivot operations rapidly, whether that involves shifting production to alternative facilities or rerouting shipments to avoid delays. Investing in agile manufacturing systems and flexible logistics networks will allow companies to respond to unforeseen challenges with minimal disruption.
Ajay Kumar: We encourage suppliers to adopt sustainable practices by integrating ESG compliance into our sourcing decisions and making it mandatory for key suppliers, covering 85% of procurement. Regular sustainability audits and ESG assessments track progress on carbon footprint reduction, energy efficiency, and ethical practices. To further drive innovation, we plan to introduce supplier recognition awards for sustainability excellence, fostering continuous improvement.
Have any frameworks or metrics been developed for evaluating sustainability, and how are they rated?
Ashish Mendiratta: Companies have shifted their focus from just sustainability to a more comprehensive approach called responsible sourcing and responsible procurement. This broader framework incorporates sustainability, social impact, and ethics & compliance, ensuring that procurement practices align with environmental responsibility, fair labor practices, and ethical governance.
To assess suppliers under this framework, organizations have developed structured evaluation metrics. When registering as a supplier, businesses are now required to provide detailed information about their sustainability initiatives, environmental impact, and labor practices. Companies are no longer just asking if suppliers pay the minimum wage but are increasingly focused on whether they provide a living wage, which accounts for the actual cost of living and ensures fair compensation. Along with this, suppliers must prove compliance with labor laws, ethical business practices, and environmental regulations through audits and certifications.
The rise of digital transparency has made responsible sourcing more critical than ever. With instant access to information and the rapid spread of news on social media, any non-compliance or unethical practice in a supplier’s operations can quickly escalate into a reputational crisis for the buying company as well. Many companies are implementing Blockchain technology to enhance traceability and ensure compliance across multiple tiers of suppliers in the upstream value chain. This has led organizations to adopt strict due diligence processes, ensuring that their suppliers adhere to ethical and environmental standards. Many global companies now consider responsible procurement a core business requirement rather than just a compliance necessity.
Although the level of enforcement varies, many organizations are adopting responsible procurement due to a combination of factors—risk management, regulatory compliance, and brand protection. Whether driven by legal requirements or the fear of reputational damage, this trend is reshaping procurement strategies worldwide. Today, procurement is no longer just about cost and delivery; it is about ensuring that every purchase supports a responsible, ethical, and sustainable supply chain.
Ultimately, companies are moving beyond basic compliance and towards proactive sustainability management, ensuring that procurement strategies align with global environmental and ethical standards. These frameworks help create resilient, future-ready supply chains that not only meet regulatory requirements but also enhance corporate reputation and long-term business viability.
How do you foresee procurement function evolving from here on?
Ajay Kumar: Procurement is evolving from a cost-driven function to a strategic enabler of business resilience, sustainability, and innovation. Future procurement will be digitally driven, leveraging AI, blockchain, and predictive analytics for smarter decision-making, supplier risk assessment, and end-to-end visibility. Sustainability and ESG compliance will become non-negotiable, with circular economy principles shaping sourcing strategies. Resilient supply chains will prioritize nearshoring, multi-sourcing, and supplier collaboration. Procurement teams will need to upskill in data analytics and digital tools to stay ahead. Ultimately, procurement will shift from transactional operations to a value-creation function, driving competitive advantage in an increasingly complex global landscape.
Anoop Bansal: The procurement function will continue to become more strategic & important for the organizations as the world becomes more volatile and unpredictable. Function which needs to manage multiple dimensions across extended supply chain in addition to cost optimization and has a huge impact on organization’s financial performance (both top line & bottom line) will continue to shine as Strategic Partner to Business Leadership by leveraging emerging technologies and helping business navigate multiple challenges in current environment.
Categories
