The procurement function stands at a critical crossroads as we approach 2025. Today’s challenges go far beyond traditional cost-cutting. Market volatility, geopolitical tensions, and accelerating digital transformation have created a perfect storm of complexity — one that demands fresh thinking and new solutions.
Organizations are now relying on procurement teams not only to deliver cost savings but also to mitigate risks, drive innovation, and create sustainable value. According to recent research, 76% of CPOs say their role has become significantly more strategic over the past three years. Yet many teams are still held back by outdated tools and processes that limit their ability to meet these rising expectations.
To succeed in this environment, procurement leaders need to adopt proactive strategies that address both immediate pressures and long-term structural challenges. That means a mix of technology, process redesign, and skills development.
With that in mind, let’s dive into the most urgent challenge facing procurement teams today: supplier risk
Among the most critical procurement challenges facing organizations today, supplier risk management challenges have taken center stage. The financial and operational impacts of unreliable or non-compliant suppliers have never been more severe, with recent studies showing that supplier disruptions cost organizations an average of $184 million annually in lost revenue and productivity.
The complexity of modern supply networks has amplified these risks considerably. A typical enterprise now manages between 10,000-20,000 third-party relationships, each representing a potential point of failure. When suppliers experience financial distress, compliance violations, or operational breakdowns, the ripple effects can quickly cascade through the entire value chain.
Addressing this kind of risk requires a multi-faceted approach. The most effective procurement teams:
Leading organizations are also prioritizing supplier diversification, carefully balancing efficiency with risk reduction.
More advanced teams are adopting risk-adjusted total cost of ownership models that factor in financial exposure alongside price — a shift that’s changing how sourcing decisions are made.
Still, many organizations find even their best efforts slowed by internal processes that add friction and delay across the procurement lifecycle.
The second major obstacle facing procurement teams involves persistent procurement process inefficiencies that drain resources and limit strategic impact. Manual workflows, data silos, and disconnected systems continue to plague organizations of all sizes, with research indicating that procurement professionals spend up to 70% of their time on transactional activities rather than strategic initiatives.
These inefficiencies show up in many forms, creating friction across the procurement lifecycle. Purchase requisitions stall in approval queues, vendor onboarding drags on for weeks, and contract negotiations break down due to missing information.
Purchase-to-pay is especially complex. The journey from identifying a need to receiving and paying for goods often involves multiple handoffs — between departments, systems, and approval layers. Each one introduces risk: delays, errors, and frustration.
Solving these bottlenecks takes a systematic approach to process optimization:
By reimagining procurement processes from the ground up, organizations can remove the blockers that have long held teams back. This opens the door to the next—and equally critical—challenge: gaining full visibility into enterprise spend.
Perhaps the most persistent of all procurement challenges is the struggle to gain comprehensive visibility into organizational spending. Despite significant investments in procurement technology, many companies continue to operate with limited insight into what they're buying, from whom, and at what price. This lack of transparency directly undermines cost reduction in procurement efforts and exposes organizations to unnecessary risks.
Spend visibility gaps create fertile ground for maverick spending to flourish unchecked. When purchases happen outside established procurement channels, organizations not only miss out on negotiated pricing — they also lose the ability to aggregate demand, standardize specifications, and enforce supplier compliance.
The root causes of poor visibility often include:
Forward-thinking procurement teams are addressing these challenges through a mix of technology adoption and process improvement. Today’s most advanced spend analytics platforms use AI and machine learning to automatically categorize transactions, spot patterns, and surface potential savings.
In our experience, organizations that achieve true spend visibility typically identify immediate savings opportunities of 3-5% across their addressable spend, with the most significant gains coming from previously unmanaged spend categories where pricing variations can exceed 30% for identical items.
By closing visibility gaps, procurement teams not only uncover savings — they also gain the clarity needed for better decisions and measurable business value. And that visibility becomes even more critical when navigating the next challenge: supply chain disruption.
The frequency and severity of supply chain disruption management challenges have escalated dramatically in recent years. From pandemic-related shortages to geopolitical conflicts, extreme weather events to cyber attacks, procurement teams now operate in an environment where disruption is the norm rather than the exception. A recent survey found that 94% of Fortune 1000 companies experienced supply chain disruptions due to these factors.
These disruptions expose vulnerabilities many organizations didn’t know existed in their supply networks. Just-in-time inventory models, consolidated supplier bases, and extended global supply chains — once considered best practices for efficiency — have now become sources of significant risk.
But the challenge goes beyond reacting to disruption after the fact. Leading procurement teams are building resilience strategies that include:
Supplier performance monitoring has become a critical capability in this environment. Leading organizations are implementing real-time monitoring tools that track supplier production capacity, inventory levels, quality metrics, and delivery performance.
The most resilient organizations are moving beyond traditional risk mitigation. They’re building adaptive procurement networks — agile systems that reconfigure in real time using digital platforms to connect with alternative suppliers and logistics providers.
As supply landscapes grow more unpredictable, the ability to anticipate and respond quickly is becoming a core procurement skill. That need for responsiveness leads directly into another persistent challenge: contract compliance.
Among the most financially significant procurement challenges today are contract compliance issues — often resulting in value leakage, legal exposure, and missed opportunities. Studies consistently show that the average organization loses 9–10% of contract value due to poor compliance, amounting to millions in unrealized savings for large enterprises.
The root causes are multifaceted and often systemic. Complex contracts with hundreds of terms become difficult to monitor manually, and decentralized purchasing decisions are frequently made without reference to existing agreements.
The consequences of non-compliance can be substantial:
To address this, leading organizations are investing in a mix of technology, process improvement, and organizational change. Modern contract lifecycle management (CLM) systems now enable automated tracking of key terms, renewal dates, and compliance status.
What separates high performers is their contract intelligence capability — the ability to go beyond storing agreements to extracting actionable insights that protect value and guide business decisions.
As procurement teams work to strengthen contract compliance, they simultaneously face pressure to adopt new technologies that can transform their operations. This transition to digital procurement represents both a significant challenge and an enormous opportunity.
The procurement function stands at an inflection point between traditional approaches and transformative potential. The challenges we've explored aren’t just operational hurdles — they’re strategic imperatives with direct impact on business performance.
Organizations that will thrive in 2025 and beyond are those that treat these challenges as catalysts for change, not barriers. By addressing them head-on, procurement teams can unlock new levels of data-driven decision-making and reshape how stakeholders experience and value the function.
Those that move first — and move decisively — will build a competitive advantage in a world that demands both resilience and agility.
Fabian Heinrich is the CEO and co-founder of Mercanis. Previously he co-founded and grew the procurement company Scoutbee to become a global market leader in scouting with offices in Europe and the USA and serving clients like Siemens, Audi, Unilever. With a Bachelor's degree and a Master's in Accounting and Finance from the University of St. Gallen, his career spans roles at Deloitte and Rocket Internet SE.
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