Full-potential procurement: Lessons amid inflation and volatility

Procurement leaders are currently facing a highly challenging market environment, characterized by a convergence of macroeconomic factors such as COVID-19 disruptions, trade policy shifts, workforce scarcity, energy transition, and extreme weather events. The Russian invasion of Ukraine has further exacerbated the situation, leading to a significant humanitarian crisis and disrupting long-established economic relationships. Pre-pandemic, lean strategies, just-in-time approaches, and global supply chain integration allowed procurement organizations to thrive. However, the current inflationary surge and scarcity of critical supplies have exposed weaknesses in the traditional operating model, including inadequate long-term planning, supply concentration, limited supplier insight, lack of cross-functional collaboration, and underutilization of technologies. Sourcing decisions now necessitate consideration of non-economic factors arising from the war in Ukraine.