Most procurement teams treat every pound leaving the business as “spend.” One bucket. One playbook. One set of negotiation tactics. The result is predictable. They cannot find savings because they never separated where the savings actually sit. Direct spend protects gross margin. Indirect spend bleeds EBITDA when unmanaged. Services spend spirals when scope is loose. CapEx locks in mistakes for years. Four categories, four failure modes, four different sourcing logics.

The debate gained traction after a LinkedIn post laid out a four-bucket spend model. Direct (cost of production), indirect (cost of running the business), services (cost of expertise), and CapEx (cost of assets and investment). The post drew procurement directors, category managers, sourcing transformation leaders, and senior buyers across pharma, manufacturing, energy, FMCG, and financial services. The agreement on the framework was strong. The pushback on what the framework alone can achieve was sharper.

Taxonomy Is Not Governance

The most cited critique came from Mario González, a procurement and supply chain leader at Tier-1 automotive. “Most teams do not mismanage spend because they lack categories. They mismanage it because visibility without category-specific authority changes nothing. Spend taxonomy explains the problem. Governance is what actually moves money.”

Shehab Hagag, a supply chain and operations transformation leader in KSA and the GCC, drew the same line. “Each spend category requires not only a different sourcing strategy, but also a different governance model. The biggest gap I’ve seen is not in defining the categories, but in aligning stakeholders and decision rights accordingly, especially for indirect and services spend.”

Balaji Swaminathan, a global sourcing and supplier strategy leader working with global OEMs, completed the picture. “The real unlock happens when this segmentation is combined with ownership and capability.”

The pattern is consistent. Categorizing the spend tells you what you have. It does not tell you who decides, who approves, or who absorbs the cost when the decision goes wrong. That second question is where most organizations stall.

Services Spend Is the Biggest Mess

The category that drew the most concern was services. Multiple operators flagged it as the most immature, the most poorly governed, and the largest unmanaged opportunity.

Mark Coulson, Co-Founder of SmartBuyer and a CIPS-qualified procurement expert, was direct. “In my experience, Services spend is the most immature, poorly governed and undefined. A bit of a catch-all for spend that doesn’t fit in the other categories nicely, and the data quality is typically very poor. It’s a big opportunity, but you need the streetwise experience to manage it.”

Omer Sasson, a direct sourcing specialist working with 7 and 8-figure D2C and Amazon brands, agreed. “Services spend is the one that quietly gets out of control. Clear scope and outcome-based payments make a massive difference.”

Jon Milton, a services procurement consultant, pushed the best-practice list further. Beyond clear scopes and milestone payments, he argued for “enable competition” and “ensure effective project governance.” His logic: “If, as McKinsey make us believe, c70% of projects fail, helping line managers to collaborate effectively with suppliers on projects post go-live is surely value-adding. Plus, it ensures variation orders and land and expand activities are controlled to protect the bottom line.”

Sean Dollar, a Senior Buyer focused on strategic sourcing and SRM, gave a shop-floor view of how badly the category gets handled in practice. “I have seen MRO buyers forced to act like a Swiss Army knife while juggling office supplies, CapEx projects, and even a few direct material accounts. This creates massive P&L blind spots.” His framing of where procurement adds value: “We add the most value when we act as a strategic bridge between the production line and the finance office. How do you gain that seat at the table before an irreversible decision drains your EBITDA?”

Marketing Should Not Be in Indirect

The sharpest reframing on the category boundaries came from Rebecca Bellairs, Co-founder of Pitch’d. “I honestly don’t think marketing spend should sit in the indirect cost bucket or be treated in the same way as other services. Consolidation often loses technical mastery, cheap impacts return, and desired outputs eg brand awareness and loyalty take time that no procurement metric can and should try to interfere with. I want to start a petition to move it out of procurement and go rogue, reporting into the CMO.”

Her appeal to procurement on promotional items was specific. “Just please ban all low quality promotional items. No one needs £5 branded headphones or a key chain, and they definitely aren’t wearing a gifted baseball cap.”

Bellairs’ point lands on a real tension. The same procurement playbook that consolidates IT software vendors will destroy value when applied to creative agencies. Different categories require different governance. Marketing may be the clearest case for category-specific decision rights.

The Data and Classification Problem

Several commenters argued the four buckets only work if the underlying data lets you separate them.

Abdulmajeed Al Sheraim, a procurement and contracting leader, pinpointed the gap. “The biggest gap is usually visibility and classification. Many organizations don’t have clean spend data to even separate Direct, Indirect, Services, and CapEx properly, so strategies end up reactive rather than intentional. Procurement maturity starts with understanding what you’re managing before deciding how to manage it.”

Chong Wan Yun, a learning and transformation leader, surfaced an even more basic problem. “Some organisations don’t even know how to differentiate between trade and non-trade. When that basic clarity is missing, everything gets lumped as ‘expenses,’ and procurement is expected to deliver savings without a clear foundation. At that point, it’s not a strategy issue. It’s a culture issue. And that’s the hardest part to change.”

Muhibuddin Soekarno, a procurement advisor with 20 years in energy and petrochemicals, put the practical question to the original framework. “What’s your practical approach to classify these spend buckets quickly assuming the Procurement org use SAP when relying only on standard procurement reports?”

That question, often asked but rarely answered cleanly, is where most spend transformation projects spend their first six months.

The Procurement Pro as Financial Architect

Bishowjuti Bhattacharjee, a strategic procurement professional and chartered MCIPS, widened the role description. “A modern procurement professional acts as a Financial Architect of the business cycle too. Beyond simple sourcing, managing categories, they strategically manage the Cash Conversion Cycle to ensure the organisation’s ‘metabolism’ remains healthy. By aligning AP with AR and tailoring payment terms to specific spend categories based on their nature, they protect operating cash flow.”

Dr. Srinivasan CT, Head of Infrastructure and Procurement in financial services, added three operational refinements. “CapEx to be tracked till capitalisation and extend to asset management to create best value. Opex to inwarded with order to receive and tracked till consumption. Service cost structure to be fixed to variable to outcome based.”

Veronica Scorrano, a strategic sourcing and procurement leadership specialist, made the connection to the broader financial plan. “Leading organizations go further, refining these categories to build a roadmap that clearly connects sourcing strategy to cost savings and cost avoidance impacts across the financial plan.”

The Strategic Shift

Pankaj Tuteja, Head of Operations at Dragon Sourcing, captured the broader transition this enables. “When the procurement team clearly separates direct, indirect, services, and CapEx spending, the team gets real visibility into where money is going and what levers to pull, whether it’s protecting margins, controlling maverick spend, tightening scope, or optimizing long-term investments. In this context, procurement shifts from cost-cutting to value creation, making decisions based on insight rather than assumptions.”

Olga Catena, a supply chain consultant and educator, summarized the operational consequence. “When you separate spend by category, you stop negotiating blind and start making decisions with real criteria.”

Takeaways for Procurement Leaders

Three lessons run through the discussion. First, taxonomy without authority is theater. The four-bucket model only works when each category has its own governance, decision rights, and accountability.

Second, services is the highest-leverage category to fix. Poor scope, poor data, and weak governance combine to make it the largest unmanaged spend in most organizations.

Third, the foundation is data and culture. If finance and procurement cannot separate trade from non-trade, no sourcing strategy will land.

Which of the four spend categories is most poorly governed in your organization?

Continue the discussion on Chain.NET, the global supply chain community, at www.chain.net. Ask questions, join events, and access exclusive resources.

Most supplier decisions still come down to one number: the price on the offer. That number is real. But it is also the first layer of a much deeper cost structure most procurement teams never quantify, never charge back, and never present to finance. The result is predictable. Organizations think they bought cheaper. In reality, they bought fragility and paid for it in fragments scattered across the P&L.

The debate gained traction recently from a Director of Procurement working on what he calls Value Hacking, a method for mapping the five layers of cost that traditional Total Cost of Ownership (TCO) analysis tends to ignore. Layer 1 is visible costs (price, transport, customs, storage). Layers 2 and 3 cover risk, firefighting, urgent orders, air freight, and line stops. Layers 4 and 5 cover internal friction (hours lost managing incidents) and lock-in (the inability to pivot when markets shift). The post drew procurement directors, supply chain transformation leaders, IT category managers, packaging buyers, and economists who pushed the framework into operational territory.

Bought Fragility, Paid in Fragments

The most cited line on the thread came from Tomasz Tyras, a senior supply chain and S&OP architect. “The most expensive supplier decision is often the one that looked cheapest in the tender file.” His diagnosis went further. “Price is easy to compare because it is visible. Instability, escalation, lost planner hours, expediting, and reduced room to pivot usually sit somewhere else in the P&L, so they get treated as ‘operational noise’ instead of procurement cost.”

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Most procurement job descriptions still treat direct and indirect as variations of the same role. Anyone who has actually run both will tell you that is wrong. The categories share a vocabulary. They share almost nothing else. Direct rewards rigor, supply risk management, and category depth. Indirect rewards political navigation, demand challenge, and influence without mandate. One playbook does not fit both, and the skills that make a great direct buyer can stall an indirect one.

The debate gained traction recently on social media and drew commentary from CPOs, category managers, S2P specialists, and consultants across pharma, manufacturing, energy, and tech. Some agreed sharply. Others pushed back. The most useful additions came from operators describing what actually breaks in the field.

The Skills Are Not the Same

Aiman Nadeem, a global sourcing expert, captured the divide in one line that became the most-liked sentence on the thread. “Direct teaches you how supply chains work, but Indirect teaches you how organizations actually work.”

Mario González, a procurement and supply chain leader at Tier-1 automotive, drew the same line from his career. “Direct taught me rigor. Indirect taught me influence.” His diagnosis went further. The real complexity in indirect is not the categories themselves. “It’s navigating budget owners who don’t see themselves as stakeholders until something goes wrong. In industrial manufacturing, indirect spend governance fails there first.”

Mayar Aljahmani, a strategic procurement and finance professional, pinpointed where the difficulty actually sits. “Indirect procurement becomes complex not because of the market, but because of the internal environment. In direct procurement, demand is usually clearer and more structured. In indirect, requirements can be vague, changing, and influenced by multiple stakeholders with different priorities.”

Not Everyone Agreed Indirect Is Harder

Two senior voices challenged the complexity ranking head-on.

Rune Alleslev, Head of Procurement at PwC Denmark, pushed back directly. “I tend to disagree on the differences in complexity. I think they are different in complexity but you can’t say one is more complex than the other. Indirect is complex as it covers the whole value chain of the company and purchasing is typically done more local and decentralised meaning higher focus on those stakeholder relationships. Direct is an integral part of the supply chain so a much bigger focus on supply risk. We’ve seen the past 6 years how complex that is.”

Angus McIntosh, a procurement consultant and former Global CPO, offered the same balance. “Indirect is generally more challenging in terms of stakeholder complexity, but direct often demands more deep category expertise. There are exceptions but those are the general patterns.”

The reframing is useful. Each side punishes a different weakness. Direct exposes weak category and supply risk skills. Indirect exposes weak political and demand-challenge skills.

Demand Management Is the Missing Tactic

The single most cited gap in the original post was demand management. Multiple operators argued that challenging the need beats negotiating the price.

Sean Dollar, a Senior Buyer focused on strategic sourcing and SRM, framed indirect as “the management of organizational entropy.” While direct “deals with the predictable order of a Bill of Materials,” indirect must navigate “the natural chaos of decentralized, non-standardized spend across a complex stakeholder ecosystem.” His missing tactic: demand management. “The discipline of auditing the ‘What’ before we ever negotiate the ‘How much.’” In MRO buying, he noted, the biggest wins come from identifying specification creep or aligning consumption patterns across IT and Finance before the RFP cycle even begins. “This shifts our role from being a transactional price-checker to a ‘Systems Auditor’ who can prove that reducing unnecessary demand is far more impactful to the bottom line than a marginal price concession.”

Serhat Soyer, an Indirect Procurement Manager, made the same point in tighter form. “In Direct, demand is structured. In Indirect, it’s often unclear, which means Procurement must challenge needs, not just source. That’s where real influence starts.”

Strahinja Jovanovic, a supply chain builder in eCommerce, summarized the principle. “Before sourcing, challenge ‘do we need this?’ and standardize where possible. In indirect, controlling consumption can beat renegotiating price.”

Influence Without Mandate

The hardest critique of the trust-and-data tactics came from Rabih Suleiman, an SAP Ariba and Jaggaer end-to-end specialist. He flagged three things missing from the typical indirect playbook.

First, category management. “Trust, data and strategic sourcing are tactics. Without structured category management underneath them you are reacting to spend rather than shaping it.”

Second, real partnership requires substance, not regular meetings. “An IT leader who sees procurement as a brake does not become a partner because of a regular meeting. He becomes one when procurement speaks his language and helps him move faster.”

Third, and the hardest one. “Indirect procurement without budget ownership is influence without mandate. If the budget sits across twelve departments and procurement has no formal role in allocation, strategic sourcing stays a recommendation not a decision.”

That mandate gap is what Mario González described from manufacturing. Budget owners do not see themselves as stakeholders until something goes wrong, by which point the leverage has evaporated.

Change Management and Adoption

Pankaj Tuteja, Head of Operations at Dragon Sourcing, added what he called Tactic 4. “Change management is critical. User adoption is vital in indirect categories. Even the best sourcing strategy can fail without it. Whether it’s a new SaaS tool or a marketing agency, we have to drive adoption very well to get success, manage resistance, and embed new ways of working.” His framing of the broader debate: “Direct builds strong fundamentals (cost, negotiation, supply risk). Indirect sharpens strategic thinking and business alignment. Both are essential.”

Olga Catena, a supply chain consultant, reinforced the point. “In indirect procurement, you’re constantly convincing internal teams to adapt, align, or adopt new processes. That’s where emotional intelligence and communication become as critical as negotiation skills.”

The Data Problem No One Has Solved

Magda Paslaru, founder and CEO of Rainbowidea, raised the data reality that operators recognize immediately. “Big one for me is how messy the data gets in Indirect. Direct usually means some kind of SKU discipline (or at least a system that sorta tries). Indirect is expense lines in 10 different systems, 3 naming conventions, and a guessing game every quarter. Untangling that into ‘actionable spend’ is a whole job on its own. Ever seen anyone truly nail automated visibility across indirect, or is everyone just halfway there?”

Hisham Serry, a supply chain director, described one practical workaround his team built. “We added value by requiring a specific format for free-text fields in indirect POs. This allowed us to use Power Query to extract the data from the ERP and transform it into a structured table, providing better visibility into our spending.”

Orhan Savaş, founder and CEO of Zentria Flow, added the cross-functional layer. “Indirect procurement often surfaces hidden bottlenecks that only show up when you really dig into cross-department workflows. Mapping those out early has saved us a lot of headaches later.”

Indirect Engagements Never End

Colin Butts, a value creation and procurement leader, captured what makes indirect different in nature, not just in skill. “In indirect procurement, engagements aren’t transactional. We don’t exchange money for goods. Instead, we purchase software, ongoing services, capex expenditures (and maintenance), and facilitate the management of facilities and construction. None of these activities conclude after the purchase is made. The relationships and needs of the company are constantly evolving, and indirect procurement must adapt to support these changes.”

That ongoing-relationship framing explains why a transactional mindset breaks down faster in indirect than in direct.

Takeaways for Procurement Leaders

Three lessons run through the discussion. First, the skills are different, not interchangeable. Direct demands category depth and supply risk discipline. Indirect demands political navigation, demand challenge, and adoption work.

Second, demand management is the most underrated lever in indirect. Auditing the “what” before negotiating the “how much” produces bigger wins than price concessions on services the company may not need.

Third, influence without mandate is the structural ceiling. If procurement has no formal role in budget allocation, strategic sourcing in indirect stays a recommendation not a decision.

Have you worked in both direct and indirect procurement? Which set of skills moved your career faster?

Continue the discussion on Chain.NET, the global supply chain community, at www.chain.net. Ask questions, join events, and access exclusive resources.

Most procurement teams treat every pound leaving the business as “spend.” One bucket. One playbook. One set of negotiation tactics. Then they wonder why savings run out, maverick purchasing keeps growing, and finance stops taking them seriously. The problem is not effort. It is architecture.

The debate gained traction after Tom Mills posted a breakdown of the four spend categories on LinkedIn. Direct spend, the cost of production. Indirect spend, the cost of running the business. Services spend, the cost of expertise. CapEx spend, the cost of assets and investment. Each demands a different approach. Each fails in a different way. The post drew procurement leaders, transformation consultants, CFO advisors, and operators who pushed the framework into sharper operational territory.

Different Failures, Different Logic

The strongest framing came from Tomasz Tyras, a senior supply chain and S&OP architect. “A lot of procurement leakage starts when companies call everything ‘spend’ and then manage none of it with the right logic.” His diagnosis landed with the most engagement on the thread. “Direct, indirect, services and CapEx may all hit the P&L differently, but more importantly they fail differently. That is why one sourcing playbook across all categories usually produces cosmetic savings in one area and value destruction in another.”

His prescription was specific. Margin protection for direct. Compliance and demand control for indirect. Scope discipline for services. Lifecycle economics for CapEx. “Procurement becomes strategic the moment it stops chasing price and starts shaping financial outcomes.”

Sanchita Sur, a Gen AI founder and thought leader incubated by SAP, reinforced the point in one line. Each category operates on a completely different value logic. “Margin (direct), efficiency (indirect), outcomes (services), and long-term returns (CapEx). Applying one lens across all four is where most teams go wrong.”

Romain Ducrocq, a global indirect procurement leader with a $160M international scope, drew the same conclusion from enterprise transformation work. “Many professionals don’t struggle with spend first, they struggle with spend architecture.” When categories are aggregated, he noted, “margin levers get mixed with opex control, scope-based services get managed like unit-price buys, and lifecycle decisions get reduced to purchase price.” That, he argued, is when value leakage stops being a negotiation issue and starts becoming a structural one.

Visibility Is the Starting Point, Not the Solution

A second thread argued that categorization is only the first step. Governance is where most organizations break down.

Mark Strange, a procurement and supply chain transformation leader and founder of Möbius Nexus, pushed back on the idea that structure alone solves the problem. “Categorising spend is only the first layer. The real problem many organisations face today is not what bucket the spend sits in, it is how the spend is governed once it enters the system.” He listed the failure modes he sees regularly: fragmented catalogue governance, uncontrolled supplier onboarding, disconnected P2P processes, poor demand management. His verdict was sharp. “Spend visibility does not automatically create spend control. The real shift happens when procurement moves from spend classification, to spend orchestration across the entire enterprise.”

Sebastian Grigoras, a tail spend specialist, added the cross-functional angle. “Visibility as a starting point. The challenge may sit in getting procurement, Finance, and the wider business aligned closely enough to turn visibility into different decisions and better buying behaviours.”

Nis-Peter Iwersen, an interim procurement and supply chain excellence leader, warned that without a structured Total Spend Analysis there are no clear priorities, no category-specific strategy, and no sustainable savings. “Analysis alone doesn’t deliver impact, execution does.”

The Cost of Confusion

Mark Coulson, Co-Founder of SmartBuyer and a CIPS-qualified procurement expert, surfaced a category that most frameworks miss entirely. “For me, the real challenge isn’t managing them separately, it’s when they collide and overlap.” He gave two examples. IT needs Facilities for their data centre. Marketing needs IT for their martech stack. That spend, he argued, sits in no-man’s land and is only half-managed. He proposed a fifth bucket. “Hybrid spend (maybe call it ‘cost of confusion’?).” Cross-functional projects nobody owns. The spend that falls between departments. “There’s savings to be found in those ‘gaps’.”

Jeff Miller, a global procurement leader, voted for the indirect-plus-services combination as the biggest governance problem. “Very often departments or individuals do their own sourcing for those services.”

Where the Real Money Bleeds

Several operators pointed to specific category leaks most procurement teams underestimate.

Pamela Hopper, a procurement executive focused on TCO and value creation, flagged direct tail, indirect, service spends, and freight as chronically overlooked. “In most manufacturing environments, freight belongs right under Direct COGS.” Her discipline: a formal review of Direct “B”, Freight, Indirect, and Service spends at least every 3 years. “With current AI technology, we can now also manage the Direct C tail spend with much higher efficiency.”

Omer Sasson, a direct sourcing specialist working with 7 and 8-figure D2C and Amazon brands, drew the clearest comparison. “I’ve seen teams chase 5 to 10% indirect savings while direct spend leaks millions through poor should-cost modeling and weak supplier partnerships.”

Clayton Michael-Butler, a veteran-led business consultant working with $1M to $50M founders, pointed to the structural reality in smaller organizations. For many of his operators, all money leaving the business is just “expenses.” They have no procurement team. The categories blend into one drain. “We find $60K in duplicate software under Indirect, or $95K in mispriced service contracts because scope blurred over time. That’s real money that bleeds straight off the margin. It’s a structural problem before it’s anything else.”

Matt Hunter, focused on energy and sustainability management, added the energy spend angle. For direct, “energy spend on process is usually held to a budget that doesn’t take into account the recent volatility or upward trend of tariff and supply rates.” For indirect, facility energy spend is seasonal with decentralized procurement, no benchmarking, and no strategy.

Conversations With Finance Change

Matthias Svetic, an advisor on deal communication, captured the shift that happens when teams finally separate the four categories. “The real problem here isn’t the categories. It’s that most teams never separate them in the first place. Once you do, every conversation with finance and leadership changes. You stop defending costs and start showing where margin is being built or lost.”

Chantell L., an enterprise value leakage advisor, pointed to where the fastest value sits. “The mistake isn’t lack of effort, it’s using one playbook for four very different spend types. The fastest value is in Services and CapEx: tighten decision rights, lock scope to outcomes, and manage total lifecycle impact.”

Strahinja Jovanovic, a supply chain builder in eCommerce and qCommerce, summed up the architecture point. “Getting the supplier wrong isn’t just a cost issue, it’s a depreciation + downtime + switching cost problem for years. Procurement + Finance alignment here is everything.”

Takeaways for Procurement Leaders

Three lessons run through the discussion. First, different spend categories fail differently. Direct bleeds margin. Indirect bleeds EBITDA. Services bleed scope. CapEx bleeds the balance sheet for years. One playbook cannot fix four different failure modes.

Second, visibility is not control. Structured Total Spend Analysis is the starting line. Spend orchestration, governance, and demand management are where value is actually created.

Third, watch the gaps. Cross-functional spend that sits between departments is often the largest unmanaged category. The “cost of confusion” is real and quantifiable.

Which spend category is most often unmanaged in your organization: direct, indirect, services, or CapEx?

Continue the discussion on Chain.NET, the global supply chain community, at www.chain.net. Ask questions, join events, and access exclusive resources.

Every procurement team faces the same quiet dilemma. Control too much and stakeholders route around you. Control too little and spend slips out of the budget. Both failures look different from the outside. Inside, they come from the same weakness. A function that has not found its role.

The debate gained traction after Tom Mills, a procurement commentator, posted on LinkedIn about what he calls the Procurement Paradox. His argument is simple. Overcrowding the process kills delivery, blocks innovation, and feeds shadow procurement. Rubber-stamping everything invites compliance failures, budget overruns, and maverick purchasing. “The answer isn’t picking a side. It’s mastering the middle,” he wrote. The post drew procurement leaders, consultants, and operators who pushed the idea into practical territory.

Design, Not Intent

The strongest thread in the discussion was that the middle has to be engineered. It does not emerge from good intentions.

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A year ago, China sourcing was a risk management conversation. In 2026, for many industries, it has become a crisis management conversation.

That’s the assessment from Ugo Flumian, a Chief Procurement Officer who has been tracking the structural forces reshaping global sourcing decisions. His analysis has sparked debate among procurement leaders about how to navigate what has become one of the most complex sourcing environments in decades.

“Five structural forces have landed simultaneously, and they are reshaping the equation,” Flumian wrote, outlining the convergence that has transformed procurement strategy.

The Five Forces

CBAM is live. The Carbon Border Adjustment Mechanism took effect January 1st. This is not a future threat but a present cost. For Chinese steel and aluminium, analysts are already tracking 15-20% increases in total landed cost. Expansion to chemicals and plastics is already on the legislative roadmap.

China has weaponised critical minerals. Gallium, germanium, graphite, tungsten: export controls imposed in successive packages through 2024-2025. Companies that have not yet developed alternative sources are operating in a structurally fragile position.

Tariff unpredictability is now structural. Annual procurement cycles can no longer keep pace with the speed of regulatory change. The most advanced companies are shortening contract durations and keeping alternative suppliers qualified even when not immediately using them.

Chinese overcapacity is a strategic trap. Lower prices today equal deeper dependency tomorrow. Companies that hollow out their European supply base chasing Chinese deflation will face an expensive rebuilding exercise when the next disruption arrives. And the next disruption is not a question of if.

The Atlantic fracture complicates everything. Europe is navigating between US economic coercion and Chinese strategic competition. The practical implication: every category now requires a different answer, “strategic” or “commercial,” with entirely different regulatory and board-level implications.

Not All Categories Are Equal

Pierre Courtemanche, a sustainability and supply chain strategist, highlighted a critical shift in how companies must think about the China question.

“The China question is no longer a country-level decision. It’s becoming a product and material-level decision,” Courtemanche observed. “Two products sourced from China can carry completely different risk profiles depending on upstream materials, export controls, carbon exposure under the Carbon Border Adjustment Mechanism, or regulatory pressure.”

His reframe: “The real question is no longer ‘China or not China?’ It’s ‘which inputs, with what risk, and with which alternative ready?’”

Flumian’s category-by-category breakdown reveals the nuance required in 2026:

Potential Exit, Critical: Sensors and IP-sensitive power electronics carry potential risk of IP leakage from Chinese manufacturing partners. Companies need to carefully evaluate how sensitive the technology is for finished products and weight European or Japanese alternatives’ landed cost on the finished bill of materials.

Near-Shore, Urgent: Aluminium diecasting math has changed under CBAM. Chinese aluminium production remains heavily coal-powered. European and Turkish foundries, predominantly electric arc furnace-based, now can have a structural cost advantage once CBAM is included in the total landed cost model. For sheet metal and machining, steel CBAM plus lead time plus cost of capital on in-transit inventory means Eastern Europe can become competitive again in some cases.

China+1, Qualify Now: PCBA presents a mixed picture. China’s dominance at ecosystem level remains intact, but semiconductor export controls are creating lead time unpredictability on advanced chips. For complex, IP-sensitive PCBA, the case for European qualification has become stronger. For high-volume commodity assemblies, China with Vietnamese contingency remains rational.

Electrical motors require particular attention. “Watch the hidden rare earth dependency,” Flumian warned. “Motors ‘assembled in India or Eastern Europe’ often use Chinese-sourced NdFeB magnets. True resilience requires tracing rare earth content back to origin.”

Stay, But Rebuild Your Cost Model: Structural steel, plastic injection, and commodity PCBA still show real Chinese advantage, but cost models need updating. Anti-dumping duties, Corporate Sustainability Due Diligence Directive compliance, and in-transit inventory cost of capital all change the equation.

The Ecosystem Challenge

Wil Liew, who specializes in cross-regional tooling and manufacturing execution, offered a practical perspective on the ground reality.

“In practice, what we often see is that companies are not really replacing China, but rebalancing sourcing risk,” Liew observed.

He identified the core challenge many companies face. “China still offers unmatched speed in tooling development and engineering iterations. The challenge for many companies is not leaving China, but replicating its manufacturing ecosystem elsewhere.”

This ecosystem advantage explains why wholesale exits from China remain rare despite the mounting pressures. The infrastructure, supplier density, engineering capabilities, and speed that China offers took decades to build and cannot be replicated quickly elsewhere.

The Cultural Dimension

Roberto Cavani, a founder and CEO with Chinese business experience dating to 1998, offered a reminder about perspective.

“Don’t look at China with European eyes,” Cavani cautioned. “To understand China in depth you need to look at China with Chinese eyes.”

The comment underscores a tension in the current debate. While structural forces are undeniably reshaping the sourcing equation, understanding how China will respond, adapt, and compete requires more than spreadsheet analysis. Companies that have built deep relationships and cultural understanding in China over decades face different calculations than those treating it purely as a commodity sourcing decision.

The Real Landed Cost

Flumian’s central message cuts through the complexity: “Stop comparing ex-works prices. The real landed cost in 2026 includes CBAM, compliance cost, geopolitical risk premium, and cost of capital.”

When everything is modeled, he argues, the Chinese advantage is narrower than procurement dashboards suggest.

This represents a fundamental shift in how procurement teams must operate. The traditional approach of comparing supplier quotes and selecting the lowest price no longer captures the full picture. Total landed cost now includes:

Carbon costs under CBAM that penalize coal-powered manufacturing. Compliance costs for sustainability due diligence requirements. Geopolitical risk premiums for supply chain fragility. Cost of capital tied up in longer lead times and in-transit inventory. Qualification costs for maintaining alternative suppliers even when not actively using them.

The Strategic Framework

Don XU, a procurement head with over 20 years of experience, described Flumian’s analysis as a “very realistic view,” reflecting the sentiment of practitioners navigating these challenges daily.

The framework emerging from this discussion suggests three levels of decision-making:

Category-level assessment: Not all products carry the same risk. Sensors require different treatment than commodity plastics. IP sensitivity, carbon exposure, and critical mineral content all factor into categorization.

Alternative readiness: The most advanced companies are qualifying alternative suppliers even when not immediately using them. Contract durations are shortening. Flexibility is being built into procurement structures.

Total cost modeling: Ex-works prices are no longer sufficient. Every procurement decision now requires modeling CBAM impact, compliance requirements, geopolitical risk, and capital costs.

What Comes Next

The procurement leaders engaging with this analysis are not debating whether China sourcing has changed. They’re debating how to respond.

Some categories will exit China entirely where IP sensitivity or regulatory pressure makes continued sourcing untenable. Others will near-shore urgently as CBAM transforms the competitive equation. Many will pursue China+1 strategies, maintaining Chinese suppliers while qualifying alternatives. And some will stay, but with completely rebuilt cost models that reflect the true 2026 reality.

The companies that will navigate this best are those that have moved beyond binary thinking. The question is not China or not China. It’s which category, with what risk profile, with what alternative ready.

As Flumian summarized: “The next disruption is not a question of if.”

The procurement teams that have already done the work, qualified the alternatives, rebuilt their cost models, and understood their category-level exposure will be positioned to respond. Those still comparing ex-works prices will find themselves in crisis management mode when the next shock arrives.

Continue the discussion with procurement and supply chain professionals on Chain.NET.

The procurement professionals getting promoted right now have stopped leading with savings numbers. The ones still opening conversations with “I saved $X million” are wondering why they keep getting passed over.

That’s the uncomfortable truth emerging from a debate among procurement executives about what actually drives career advancement in the profession today.

“Early in my career, I led with savings. I had the numbers. I had the validation from Finance. And I got passed over,” wrote Mavelyn Cuches, an IT procurement leader focused on technology vendor governance. “It wasn’t until an interview for a Director role that my thinking finally shifted.”

The turning point came from a CFO’s question: “What would you do if you had no budget constraints?”

Cuches stumbled through an answer about hiring and technology. The CFO paused. Then said: “That’s not what I’m asking. I’m asking what business problem you’d solve first.”

“I didn’t have an answer,” Cuches recalled. “Because I was thinking like a procurement function. Not like a business leader.”

The Language That Gets You in the Room

The shift Cuches describes isn’t just about different metrics. It’s about a fundamentally different way of framing procurement’s contribution.

Instead of leading with savings, she started leading with outcomes:

Speed: “We cut vendor onboarding from 30 days to 5. R&D launched their pilot 3 weeks earlier than planned.”

Risk avoided: “We caught a security gap during renewal that would have cost $500K+ in breach response, before it became a problem.”

Visibility: “We built the first reliable renewal forecast. Forecast accuracy went from 45% to 90%. Finance stopped getting surprised by Q4 spend.”

Capacity created: “We freed 100+ hours per month from manual exception handling. The team could actually do strategic work instead of firefighting.”

“None of these start with a dollar sign,” Cuches observed. “All of them answer: ‘What would have broken if procurement wasn’t in the room?’”

Hamilton Lindley, VP of Procurement, Compliance and Risk, identified what separates functions from leaders. “Procurement leaders who make the biggest impact are giving operations the visibility they never had, cutting the friction out of the purchasing process so the field could focus on the job, catching spend that was walking out the door not because anyone was dishonest but because nobody was looking closely enough.”

He added a critical point: “Most procurement professionals have not learned to tell that story yet.”

Beyond Procurement-Centric Outcomes

Zoheb Shah, author of “The Procurement Detective,” pushed the argument further. The outcomes Cuches described, while stronger than savings, are still largely procurement-centric.

“The real shift happens when procurement connects those outcomes to the core business and the customers the organisation serves,” Shah wrote.

He provided examples of what that next level looks like. “Faster vendor onboarding isn’t just about process speed. It’s about accelerating product launches or service delivery. Risk mitigation isn’t just a contract issue. It’s about protecting customers, revenue, and brand trust. Better visibility isn’t just better forecasting. It enables better strategic decisions for the business.”

His reframe: “The most powerful question isn’t just ‘what did procurement improve?’ but ‘what changed for the business or the end customer because procurement shaped the supply market?’”

Cuches acknowledged Shah had pushed the thinking further than she did. “What I outlined is the intermediate step. It gets you out of savings language and into outcomes language. But you’re describing the final step: connecting those outcomes to what the business actually exists to do. That framing doesn’t just get you a seat at the table. It makes you indistinguishable from a business leader.”

The Perception Problem

Amit Rathore, a certified strategic procurement professional in pharmaceutical manufacturing, raised an obstacle many practitioners face. “People in organisation also have wrong perception about procurement. They think we are only calling vendor, loading material in trucks and delivering.”

Cuches acknowledged the perception problem but placed responsibility partly on procurement itself. “When procurement leads with tactical outputs, POs processed, vendors called, materials delivered, that’s the identity we create. The shift in how leadership sees us has to start with how we position our own work.”

Sanchita Sur, a Gen AI founder, captured the distinction. “Savings are easy to report but hard to differentiate. Outcomes are harder to define, but that’s what executives actually care about. The shift isn’t just in metrics. It’s in thinking like a business owner rather than a function.”

Changing the Scorecard

Rune Alleslev, Head of Procurement, shared how he restructured his entire measurement approach:

From Savings to Value Creation. From Risk and Compliance to License to Operate. From Optimization/Digitalization to Make it Easier to Buy.

“To stay relevant, procurement leaders should change the narrative,” Alleslev wrote.

Cuches praised the approach. “’License to Operate’ is a phrase that will land in any boardroom. Most people understand the concept. Very few have figured out how to make it measurable.”

Kevin G., an award-winning sourcing and procurement leader, noted these concepts aren’t new. “I have been speaking about this very topic for several years at industry conferences. Savings generated is number 5 or 6 on the list of things procurement should be focused on.”

When asked how to educate leadership on this broader value proposition, he outlined the approach: “Start with the C-suite, presenting the value an organization benefits from by having a dedicated procurement function. Mitigation of supply disruption. The ability to nimbly find alternative suppliers. Cultivating collaborative partnerships with key suppliers for enhanced service delivery.”

He emphasized the framing matters. “Each of these provide greater long-term value than short term price reductions. Emphasize these items first. It’s about selling the value internally. Don’t lead with or emphasize cost savings as the most important metric.”

The Capacity Problem

Marijn Overvest, author of a book on AI in procurement, identified the structural barrier that keeps many teams stuck. “Many teams are stuck in operational work. They do NOT lack ambition, but the workload leaves little room to show that broader impact.”

Cuches agreed this is the missing piece most people skip over. “It’s not a mindset problem. It’s a capacity problem. You can’t tell a strategic story if you’re buried in exceptions. That’s why the operational load has to be tackled first, not just for efficiency, but to create the space where strategic impact even becomes possible.”

Kishore Kunal, a global procurement leader managing a $250 million-plus CAPEX portfolio, noted when the connection happens. “Procurement impact often shows up through speed, risk control, and better visibility. When outcomes connect to business priorities, the value becomes much clearer to leadership.”

Cuches added: “That clarity is what changes the conversation from reporting to influencing. When leadership sees procurement in terms of their own priorities, not procurement’s metrics, that’s when the seat at the table actually means something.”

The Uncomfortable Truth

Malik Tazi raised a cynical but common concern. “Business outcomes existing because you were there only make your manager shine. Not you. Period. Unless the outcomes are bad. That’s where YOU step in.”

Zaina Kadah, with 15 years of global supply chain expertise, offered a simpler truth. “Executives listen when procurement speaks the language of business value.”

Cuches defined what that actually means. “The language isn’t procurement’s language dressed up. It’s actually learning what the business is trying to accomplish and connecting your work to that directly. That’s the skill that accelerates careers.”

The question that gets you to Director isn’t “How much did you save?”

It’s “What business outcome exists because you were there?”

Continue the discussion with procurement and supply chain professionals on Chain.NET.

In many companies, supplier selection looks like this: a rushed RFP, a few price comparisons, someone saying “they seem good,” then procurement is asked to sort the contract.

Then everyone is surprised when the supplier underperforms.

“Price should almost never decide which supplier you choose,” wrote Tom Mills recently. “Selecting the right supplier is not a gut feel decision.”

The statement sparked extensive debate among procurement and supply chain professionals about where value is truly created in the supplier selection process, and why so many organizations miss the mark.

The Late Engagement Problem

Mills presented a structured 12-step process, from identifying the need through to collaboration and improvement. But he highlighted a fundamental dysfunction: “Most stakeholders engage procurement after step 3, but the real procurement value is delivered steps 1 to 3.”

Cesar Herrera, a senior procurement and sourcing transformation leader, confirmed this pattern from his FMCG experience. “That step 3 point is the one that hurts most in practice. By the time the requisition landed, the supplier was already chosen, the budget already committed, and the timeline already impossible. Procurement just showed up to do the paperwork.”

His conclusion: “Better process helps, but the real fix is being in the room before anyone needs you.”

Hamilton Lindley, VP of Procurement, Compliance and Risk, reinforced this point. “Steps 1 to 3 are where procurement actually matters. But by then stakeholders have already decided. Getting a seat at the table before needs are defined is where the real negotiation happens.”

Omer Sasson, a director specializing in product sourcing from Asia, identified the consequence. “The biggest mistake I see is when procurement is brought in after step 3. By that point the supplier shortlist is already biased and the conversation becomes purely about price.”

Why Price Is a Trap

Romain Ducrocq, a global indirect procurement leader, explained why teams over-index on price. “Price is usually the easiest variable to compare, which is probably why so many teams over-index on it.”

But the real cost shows up later. “The real cost of a supplier often shows up later, like during implementation friction, poor fit, weak delivery discipline, hidden dependency, or other risk exposure.”

He shared a lesson learned the hard way. “The best supplier decisions I’ve seen were never just about ‘best price.’ I also learned it the hard way to be honest, poor delivery, etc. It is all about choosing the supplier the business could actually win with.”

Dipith Sharma, a supply chain analyst, provided a concrete example. “A car manufacturer chooses a cheaper semiconductor supplier. Price difference: €0.40 per chip. But the supplier delays deliveries. Production stops for 3 days. Factory idle. Loss: €12 million production loss. Saving €0.40 created massive cost.”

Tomasz Tyras, a senior supply chain and operations expert, identified where the real costs hide. “Price is just one line. Total cost is hiding in expediting, firefighting, inventory buffers, claims, and lost service.”

The Culture Challenge

Neal Falcone, founder of Peregrine Vantage, raised an obstacle deeper than process. “One of the uphill battles that many procurement teams face is related to business culture. Specifically, how procurement is perceived throughout the various organizations within a company.”

He described the dichotomy. “I have found that those procurement champion organizations engage appropriately, early, and often. I have also found, unfortunately more so, that many organizations see procurement as a necessary checkbox due to policy.”

The consequences are predictable. “When procurement is perceived as a checkbox in the process rather than a value add, doesn’t matter how much of an organized process for new supplier onboarding there is in place, everything gets rushed and ultimately becomes a fire.”

Mathew Schulz, a trusted voice in procurement, raised a tension between process and speed. “Imagine being at a MM startup in the tech sector and you grind things to a halt with a sequence that adds unnecessary friction. I wonder how that’s being taken into consideration, when the result is slower to market and your competition just closed another deal.”

Mills responded with a counterpoint. “You preach fast. I preach diligent. The two combined is the sweet spot and the controls in place need to be appropriate to the size of the purchase.”

Beyond Price: Carter’s 10 C’s

Mills recommended using a structured model like Carter’s 10 C’s to assess suppliers across multiple dimensions: Capacity, Competency, Cost, Cash, Commitment, Culture, Communication, and others.

Strahinja Jovanovic, a supply chain expert, endorsed the framework but added a caution. “Selection covers capability. Execution gap appears later. Vendor passes: Capacity and Cost and Competency. But fails: using capacity when needed, maintaining cost without scope creep, applying competency consistently.”

He proposed an addition. “I would add Step 13: Pilot validates they deliver what the selection predicted. Framework is very solid. Pilot proves they’ll use capability when you actually need it.”

Aleksandr Bondarenko, a strategic procurement professional, suggested a “Step 0” even earlier. “Stakeholder Alignment is just as critical. If Engineering, Finance, and Procurement aren’t aligned on KPIs before the RFP, even the best supplier will struggle to deliver.”

He also emphasized total cost of ownership. “Focusing on TCO rather than just unit price is what truly protects the bottom line in the long run.”

Post-Signature Governance

Alex Farr, a specialist in procurement networks and technology, raised a question about the phase after signing. “I have had countless discussions in the last year where professional services contracts don’t get continued oversight from procurement post-signature. The general discussion is that delivery oversight and monitoring of success and spend fall to other teams.”

Mills acknowledged a variable principle. “It depends on the category and it’s a long story. Some categories benefit enormously from continued procurement engagement. I wouldn’t say procurement should be the owners of reviews. But they should be invited to add a commercial perspective if needed.”

Paul R., co-founder of a services procurement governance platform, added a dimension. “How established is their internal infrastructure for managing governance of delivery and performance? They may create solid SOWs but if their governance doesn’t exist during delivery then they are less likely to have the management controls needed to identify issues before they become a problem.”

Preparation Before the RFP

Sascha Walleser, an expert in sourcing mechanical parts, added a crucial layer of preparation. “Many companies move by far too quickly into supplier comparisons without first understanding the supply market.”

He detailed what strong procurement teams do. “They invest time in analysing the supply market, understanding cost drivers and building should cost models, mapping supplier capabilities and assessing supply and geopolitical risks.”

His conclusion: “In my experience, the supplier selection is rarely won in the RFP. It is usually won in the prep and in the depth of supply market understanding before the process even starts.”

Shared Responsibility

Mark Strange, founder of Möbius Nexus, offered a nuanced perspective on supplier underperformance. “One pattern I see repeatedly in large organisations is that supplier underperformance is often attributed to the supplier itself, when in reality it originates in the way the commercial model and operating environment were designed.”

He detailed the real causes. “Even a highly capable supplier will struggle if the specification is unstable, incentives are misaligned, governance is unclear, or the organisation engages procurement too late in the process.”

His insight: “Supplier selection therefore is not just about choosing the ‘best’ supplier. It is about designing the conditions in which a supplier can actually perform.”

The Supplier Perspective

Guy Mandler, a product sourcing and procurement specialist, offered the view from the other side. “The teams that do steps 1 to 3 properly are also the easiest to work with as a supplier, because they actually know what they want before reaching out.”

Iain Lawrence, a sales professional, noted the symmetry. “As a sales professional who had been involved in many a tender process which clearly came down to price, it’s refreshing to see a procurement strategy such as this. And what is very notable is how similar that process and approach is to the one any sales professional worth their salt will apply to an RFP process.”

His conclusion: “If both parties approach tenders in this manner, that’s where you get a partnership, not just a supplier, and a win win for both parties.”

The Bottom Line

Saleh Aljneibi, a senior procurement and contracts manager, captured the root of the problem. “Many supplier challenges originate from rushed sourcing processes rather than supplier capability itself.”

Robert Cataldo, a procurement transformation expert, framed the guiding principle. “We should always choose the supplier that provides the best overall value. If you look only at the price, there can be many other cost drivers embedded in there somewhere.”

His message: “Let the procurement experts do their job.”

Tanya W., a senior procurement transformation advisor, added a dose of pragmatism. “Unless you are buying pencils. Pencils do buy cheaply.”

Mills concluded with the real objective. “The goal isn’t just to pick a supplier. It’s to build a low-risk, high-performing supplier portfolio. Because the right supplier can create enormous value. And the wrong one can create enormous pain.”

Continue the discussion with procurement and supply chain professionals on Chain.NET.

What does the ideal procurement team look like in 2026? One veteran procurement leader proposed an answer, and the response revealed just how much the profession is wrestling with fundamental questions about structure, headcount, and the changing nature of the work itself.

Tom Mills, who advises procurement professionals, laid out a 10 to 15 person team structure built around four pillars: business alignment, supplier value, operations and governance, and data and digital enablement.

The framework triggered intense discussion about whether such teams are realistic, how roles should be combined or separated, and whether certain functions belong in procurement at all.

The Proposed Structure

Mills organized his ideal team under a Head of Procurement who owns vision, executive alignment, enterprise risk, and the overall value narrative. Four leads report directly to this role.

The Business and Category Lead manages a team of three to four, including Procurement Business Partners embedded with key business units, a Category Strategy Lead owning top spend categories, and an optional Commercial Advisory Specialist for complex negotiations.

The Sourcing and Supplier Value Lead oversees strategic sourcing managers who run complex sourcing events, a Supplier Relationship Manager focused on performance and innovation, and an optional Contract and Commercial Manager for post-award value protection.

The Operations and Governance Lead handles process design, user experience, policy, compliance, and transactional buying through a team of two to three.

The Data and Digital Lead provides insight and enablement through spend analysts, risk and resilience analysts, and an optional Digital and AI Enablement Specialist.

Mills summarized his rationale: “Clear ownership by outcome. Senior roles, not junior layers. Automation absorbs admin. Business partners carry influence. Data supports judgement, not replaces it.”

The Headcount Reality Check

The first question from practitioners: is this realistic?

Brajan Gatys, who builds procurement functions at Personio, asked what many were thinking. “Is anyone here really getting that much headcount?”

Colin Bell, Group Director of Procurement at Quotient Sciences, pressed for specifics. “What size business or spend would be needed to support this structure? How would you scale it down to support SMEs?”

Thomas Bélanger offered a pointed observation. “It’s great! Now you just need a 3 billion dollar company to hire it!”

Mills clarified his assumptions. The model targets mid to large single-region businesses with annual revenue between £300 million and £1.5 billion, external third-party spend of £150 million to £700 million, limited geographic complexity, and procurement maturity beyond basic sourcing and P2P.

Felipe Solano ran the numbers. “It’s a structure of around £200-250k per year in salaries, plus bonuses, and should be operating in an organisation far above £100m turnover with a profitable stable 12-15% as minimum.”

Tahj B., a Director of Procurement who worked at Boeing, raised practical concerns. “I feel it would take years in most organizations to sell amongst the board. Even during my time at Boeing, it was lean.”

The Role Overlap Debate

Several experienced practitioners questioned whether certain roles should be separate at all.

Brian W. Lee, an AVP of Procurement, challenged the separation between category management and strategic sourcing. “For you to effectively execute contractual arrangements, you need to understand the business and objectives really well. I feel like having two separate pillars will just create a broken telephone between the two teams. I’d rather each category manager own and lead the end-to-end aspect.”

Lily Zhang, a global sourcing and procurement leader, identified a common problem. “One thing that often stands out in practice is the natural overlap between category strategy, strategic sourcing, and supplier relationship management. These roles can add a lot of value, but only when responsibilities are clearly segmented by spend, risk, or strategic importance. Otherwise, the same decisions end up being revisited across multiple layers, slowing execution and diluting accountability.”

Tomi Pesonen, a procurement advisor, suggested an alternative. “I would combine 1 and 2 and possibly combine roles pending on the scope of a business being partnered with.”

Should Compliance Report to Procurement?

James Meads, a procurement content creator and consultant, raised what he called “a controversial opinion.” He argued that Policy and Compliance should report to Finance or Internal Audit, not Procurement.

“If we’re truly going to be seen as an entrepreneurial and value-driven function, we have to shed this as a reporting line,” he wrote.

Natalia Pilipchak, a process design specialist, expanded on the conflict of interest concern. “Performance analysis of the procurement function may indeed be healthier outside of Procurement. When the same function both defines success metrics and is evaluated against them, especially where bonuses are involved, conflicts of interest are almost inevitable.”

She questioned Mills’ grouping of governance with transactional procurement. “I would be more inclined to combine governance with the data and digital pillar. Governance is about rules, and data is about the evidence of execution, real user experience and trends.”

Is Digital Enablement Still Optional?

Joël Collin-Demers, who mentors procurement teams on digital transformation, pushed back on one aspect of the structure. “I don’t know if the ‘Digital Enablement Lead’ is optional anymore though, at least in Enterprise.”

Gustavo Mattos Santos, a global operations executive, asked where AI execution fits. Mills responded that the Data and Digital lead would champion AI, but added, “I also think every part of the procurement function should be focusing on AI and how it will augment their roles.”

Kartik Shankar, a global procurement and transformation leader, predicted what comes next. “The agentic organisation to expand in 2027, I guess.”

What Works About the Framework

Despite the debates, several practitioners praised the structure’s clarity and outcome-focus.

Sascha Walleser appreciated how the model reflects reality. “I like this because it reflects how procurement actually works under pressure, not how org charts are usually drawn nicely. The clear separation between value creation, governance, and enablement is what makes it effective for me.”

He endorsed the emphasis on seniority. “Experienced people close to the business and suppliers make faster and better decisions. And keeping data and digital in a supporting role is key. Insight should sharpen judgement, not replace it.”

Steven Cox, a Chief Procurement Officer, emphasized that structure must follow strategy. “Any business questioning their structure, struggling to implement a strategy or deliver value realisation, should take a step back and do an E2E maturity audit which then provides the perfect context and justification to build the Org structure.”

Scaling Down for Smaller Organizations

Vamsi Krishna Velaga offered a practical starting point for smaller teams. “In small or early stage environments this level of specialisation isn’t always practical and teams often end up multitasking across sourcing, supplier management, compliance and data.”

He proposed a lean three-role model: “A Procurement Lead, a combined Sourcing and Supplier Manager, and an Operations or Compliance Coordinator. This ensures end-to-end coverage while still allowing the organisation to scale into your full 2026 structure.”

Mathew Schulz, founder of Pennywurth, noted that modern tools are changing what’s possible. “We’re in a time and place where organizations are looking for top tier talent who have the ability to build leveraging modern tools and new operating models. Both require rethinking how the work gets done.”

The Bigger Question

Ron Warneke, a strategic sourcing manager, offered perhaps the most pragmatic guidance. “So long as you align your organization to the Procurement Lifecycle you’ll be fine. Each organization has its own unique strategy.”

Domenico Tigani, Head of Global Indirect Procurement at Alfasigma, reminded readers that context determines structure. “It would be better to clarify that the structure depends on several factors, such as geographic coverage, company complexity, level of digitalization, team maturity, type of categories, and overall spend.”

The debate reveals a profession in transition. Automation is absorbing administrative work. AI is changing what’s possible with smaller teams. Business partnership is becoming essential. Yet headcount remains constrained, and executives still question whether specialized roles justify their cost.

Mills’ framework offers a target to aim for. The conversation it sparked shows how much ground procurement leaders must cover to get there.

Continue the discussion with procurement and supply chain professionals on Chain.NET.

Procurement leaders enter 2026 facing a sobering reality. The systems they design, the contracts they negotiate, and the supplier relationships they cultivate will mean nothing if the business ignores them.

That’s the central argument gaining traction among procurement professionals debating what separates high-performing teams from those quietly failing. The consensus: adoption beats design every time.

Tanya W., a senior procurement transformation advisor, framed the challenge in stark terms. “Like it or not, Procurement is about building strong systems that last. Systems where the business actually uses what you’ve put in place, suppliers bring you ideas before your competitors hear them, and risks do not arrive as a nasty surprise in the COO’s inbox.”

Her assessment resonated across the procurement community, triggering responses from category managers, sourcing specialists, and supply chain executives who confirmed the pattern in their own organizations.

Three Failure Modes Dominating 2026

Read more

The discussion covers Category Convergence and the rise of orchestrated Source-to-Pay stacks, the emergence of hybrid operating models that balance global control with local agility, and the growing focus on human-centered procurement experiences. The episode also dives into how connected intelligence, modern contract lifecycle management, and practical AI use cases are finally translating data into real-world business value.

The global apparel industry stands at an inflection point. Tariff wars have thrown sourcing strategies into disarray. Bangladesh faces prolonged instability. China increasingly makes products for Chinese consumers, not Western brands. And one country, long considered an underperformer, appears ready to claim the spotlight.

“I think the big winner is going to be India,” says Michael Bennett, a British sourcing executive who has spent three decades building supply chains across Asia for brands including Decathlon, Puma, and Champion. “India has not fulfilled its potential over the last 10 or 20 years. I think today is going to have its day in the sun.”

Bennett’s assessment carries weight. He opened Decathlon’s India office in 1998, hiring staff through a newspaper ad in the Times of India. Three hundred candidates showed up that first Saturday morning. Some of those original hires still work for Decathlon India today, now in senior leadership roles.

His prediction about India reflects broader shifts in how apparel brands think about where to make their products. The calculus has changed. Speed matters more. Relationships matter differently. And the old model of chasing the lowest labor cost no longer works.

The Tariff Response Varies Wildly

Every company is handling tariff uncertainty differently, and the range of responses reveals deeper strategic divisions within the industry.

Some brands have chosen patience, waiting to see how trade policy evolves before making major moves. Others went straight to their suppliers and demanded discounts to offset new costs. That approach, Bennett suggests, damages long-term relationships that took years to build.

“I’d rather not hit the suppliers with discounts,” Bennett says. “I’d rather look for opportunities to find value.”

The smarter brands are working with their manufacturing partners to find efficiencies, not simply passing along pain. Suppliers often know where costs can come out of a product or process. They will share that knowledge with brands they trust. They will not share it with brands that squeeze them at the first sign of trouble.

The most sophisticated operators have built what Bennett calls “centralized design and development” models. Product creation happens in one location. Manufacturing shifts to wherever makes strategic sense, whether that means Latin America for U.S.-bound goods or Africa for European markets. This structure allows brands to respond to tariff changes without starting from scratch each time.

What Store Experience Teaches Sourcing Professionals

Bennett started his career working the floor at a Decathlon retail store in France. He stocked shelves. He moved boxes. He watched customers touch products and make buying decisions.

That experience shapes how he thinks about supply chains today.

“You really only get those insights if you’re actually working and moving the boxes and putting the product on the shelf,” Bennett says. “I would really encourage anybody who wants to go into sourcing to get some experience of the front end as well.”

The lesson extends beyond customer preferences. Working in a store reveals how small upstream decisions create downstream problems. The placement of a label. How a garment gets folded. The quality of a shipping box. These details determine whether a retail operation runs smoothly or struggles with inefficiency.

Most sourcing professionals never see this. They work in offices thousands of miles from where products get sold. The disconnect creates blind spots.

The Hand Feel Problem

At Coach, where Bennett spent five years, product development meetings sometimes involved executives staring into space while running their fingers across leather samples. To an outsider, it looked absurd. To anyone who understood the business, it made perfect sense.

“The hand feel of getting the right smoothness, the right give in the leather, how you built that and then how you can replicate it 100,000 or 200,000 times was absolutely essential,” Bennett says.

This challenge exists across apparel categories. Champion obsessed over the feel of its t-shirts and sweatshirts. Athletic footwear brands employ chemists to develop materials that perform at elite levels. Getting the product right requires coordination among tanners, textile engineers, production managers, and designers.

The hard part comes after development. A craftsman in a sample room can produce a beautiful garment. Making that same garment at scale, with consistent quality, demands industrial discipline.

“How do you replicate something lovingly made in a tailor shop a couple hundred thousand times?” Bennett asks. “That’s an interesting problem to solve.”

Sustainability Became Standard Practice

The sustainability conversation has shifted. What once required dedicated initiatives and special programs now sits at the core of how factories operate.

“It’s just become part of doing business,” Bennett says. “It’s just another facet of doing business today.”

Factories have improved dramatically on both social and environmental compliance. The ground has shifted. But problems remain.

Brands often fail to understand how their own decisions create compliance issues at factories. Changing delivery dates. Swapping materials at the last minute. Negotiating prices down to margins that force corner-cutting. These actions happen in corporate offices. The consequences show up on factory floors.

“I think the brands and retailers do not to a great extent understand the impact of their actions,” Bennett says.

Factories hesitate to raise these issues. They fear losing business if they push back or disclose problems, even when those problems stem from brand decisions. Trust remains low. Transparency suffers as a result.

The industry tried to address audit fatigue through standardized compliance programs. Bennett worked on the Social and Labor Convergence Program, which aimed to reduce duplicative factory audits. The problem has gotten worse, not better. Factories serving multiple brands face constant audit disruptions as each customer demands its own verification process.

The 18-Month Lead Time Trap

Apparel supply chains remain remarkably inefficient. Lead times from concept to delivery can stretch 18 months. Much of that time involves waiting.

“So much of that is just waiting time, waiting for somebody to approve something so it can go to the next step,” Bennett says.

Technology promised to fix this. The industry has invested in 3D development tools, collaborative platforms, and data-sharing systems. Yet Bennett’s inbox stays full of emails and Excel spreadsheets. Late-night calls include dozens of participants, many adding a single word just to show they were present.

The technology exists to work differently. Adoption lags. Change management proves harder than software implementation.

“If your job is to sit in the head office and approve lab dips, then obviously you’re not going to be too interested if you can do it digitally or if the vendor does it,” Bennett says. “A lot of this is change management.”

Long lead times create waste. Brands commit to volumes, colors, and styles far in advance. When forecasts miss, inventory piles up or stockouts occur. The industry builds inefficiency into its operating model, then wonders why margins stay thin.

Building in New Markets Takes Patience

Opening a sourcing office in a new country sounds straightforward. Find factories. Start buying. Scale up.

Reality works differently. When Bennett set up Decathlon’s India operation in 1998, he faced a different world. No internet. Paper documentation. Government offices that required endless stamps and signatures. Backup generators because power failed regularly. Water systems independent of unreliable municipal supply.

The practical challenges have eased. The strategic ones remain.

“The key is to keep focus,” Bennett says. “Have a strategy of what you actually want to find and what you’re looking for, and then stick to it.”

Decathlon started with knitted garments in South India and equestrian equipment in the north. Only after those categories ran smoothly did the company expand into bicycles and footwear. Patience paid off. The factories developed. The relationships deepened. The business grew.

Companies driven by quarterly earnings struggle with this approach. Their attention spans run shorter than supply chain development timelines require.

What Comes Next

The apparel sourcing map will look different in five years. India appears positioned to gain share. Latin American production will grow for U.S.-focused brands. China will continue its pivot toward domestic consumption.

The winners will be brands that maintained supplier relationships through the tariff chaos rather than those that squeezed partners for short-term savings. They will be companies that invested in understanding their full supply chains, from raw materials through retail shelves. They will be organizations that finally addressed the technology and process gaps that keep lead times unnecessarily long.

The opportunity exists. Capturing it requires patience that many companies have lost.

This article is based on a video interview from The Sourcing Exchange. Watch the full conversation here

Continue the discussion on Chain.NET (www.chain.net).

The traditional category manager may be heading for obsolescence. That’s the argument sparking intense debate among procurement professionals, with many agreeing that job descriptions have failed to keep pace with how the function actually needs to operate.

James Meads, a procurement consultant, ignited the conversation with a pointed critique of current hiring practices. “We’ve spent too long obsessing over savings, risk aversion, and compliance,” he wrote. “But the future will demand a totally different toolkit and mindset.”

His assessment struck a nerve. Dozens of procurement leaders weighed in, many confirming that job postings still reflect priorities from a decade ago.

The Problem with Today’s Job Descriptions

Meads argues that companies continue hiring for tasks that add diminishing value. Sending out 50-page RFPs. Creating category strategy slide decks that no one reads after the initial review. Following rigid sourcing processes that don’t match how businesses actually make decisions.

“I look at where things are heading, and all I see are job descriptions harking back to 2015,” he wrote.

Marijn Overvest, who runs a procurement training company, agreed. “You capture perfectly how far the profession has evolved and how slowly job descriptions follow.”

Meads responded with urgency. “I just hope hiring managers wake up before their teams become irrelevant.”

John Coyne, who helps industrial teams improve sourcing velocity, put it bluntly. “The next procurement org won’t be built around cost centers and compliance. It’ll be a velocity engine. Time-to-decision, not time-in-seat, is the new ROI. Anyone still hiring for 2015 will get lapped.”

Five Roles That Could Define the Next Decade

Meads proposed five roles he believes will shape procurement’s future:

1. Builders. People who create solutions rather than implement bloated software that takes a year to deploy.

2. Directors of Agentic Operations. Leaders who manage the AI agents that will handle operational work.

3. Agility Champions. Professionals focused on speed and flexibility rather than bureaucracy.

4. Internal Comms Managers. Specialists who translate procurement language into terms the business understands and values.

5. Entrepreneurs in Residence. Innovators who challenge conventional thinking and push back against default approaches.

The proposals generated strong reactions. Some practitioners are already building toward this vision.

Robert Nichol Jr., a procurement automation expert, said three of these roles should merge into one position. “I would LOVE to pioneer: Director of Agentic Procurement,” he wrote. The role would cover end-to-end vendor management, procurement operations, internal and external communications, project management, RFP management, first-pass contract review, and risk monitoring.

“I’ve already built 75% of these automations and maintained them,” Nichol added. “Being given the remit to take them agentic would be NEXT LEVEL exciting.”

Dr. Muddassir Ahmed, founder of SCMDOJO, expressed enthusiasm for the concept. “I like Director of Agentic Operations!”

The Business Partner Role Gets Strong Support

Among the proposed roles, one emerged as a clear favorite: the Procurement Business Partner.

Davinia Watson, who holds this title, offered a passionate endorsement. “Having worked as a Procurement Business Partner for several years, I’m still amazed that more procurement functions haven’t adopted this model. The BP role is truly pivotal. It creates real value by acting as an extension of the business, understanding priorities, aligning strategies, and shaping solutions that drive outcomes.”

She added, “Out of my entire procurement career, it’s been my favourite role.”

Tanya W., a senior procurement transformation advisor, noted she has had business partners in her teams for 15 years. Others confirmed the role exists but remains underutilized.

Khaldoun Abbas, founder of a procurement consultancy, said he would prioritize this role first. “It’ll be needed more than ever to orchestrate business needs, turn them into wins, and align Procurement’s key pillars with those evolving needs.”

Nicholas Ponzo, Vice President of Procurement Operations at MSCI, agreed. “This is a key element to shift from a reactive to proactive procurement org, which I believe is the first step in transformation.”

Meads predicted the role will spread beyond large organizations. “My prediction is that we’ll start to see it in smaller teams too, as they realise that a business-facing rather than supplier-facing team member is a valued addition to their structure.”

Not Everyone Agrees on the Approach

Felipe Solano, a procurement manager in the food industry, raised a practical concern. Are these five roles already part of what mid-level and senior procurement professionals should manage?

“Procurement and its real purpose is yet to be well defined, implemented and established at the vast majority of small and medium organisations,” he wrote. He pointed to a gap between expert visions of where procurement should head and the reality of what companies actually hire for.

Meads pushed back. “If Category Managers or Sourcing Managers are expected to do this as part of their role, then organisations will always be mediocre at best. You need to specialise.”

He cited Adam Smith’s division of labor principle from The Wealth of Nations. “Most procurement folks are not strong communicators or experts in automation. And, in fairness, they never needed to be. They were taught to follow process and err on the side of caution. It doesn’t work any more in today’s economy.”

Thomas Steinmetz, a transformation leader, offered a different perspective. “Not sure extinct is the right word. Evolution is to me more appropriate.” He questioned whether AI governance should be a procurement-specific role. “Procurement is part of end-to-end processes and making this into an isolated role does to me not bring the potential value.”

The AI Factor Changes Everything

Several commenters highlighted how artificial intelligence accelerates the need for new roles.

Asmaa Gad, who specializes in AI for procurement and supply chain, described the shift underway. “The shift from process guardians to orchestrators of AI-enabled operations is already underway. The teams that embrace these new roles will move faster than the ones still optimizing 50-page RFPs.”

Faiq Ali, who works on procurement digital transformation, emphasized the capability question. “Procurement roles will evolve fastest where leaders prioritise capability that translates intelligence into outcomes rather than repeating traditional category routines.”

Radha R., a global strategic sourcing leader, pointed to supplier relationship management as a function being transformed by AI. “With AI now enabling deeper insights into strategic spend and analytics, SRM is evolving into a critical backbone of the enterprise. It anchors risk management, governance, and resilience.”

Meads agreed that related functions will consolidate. “I believe SRM, CLM and VLM will all merge into one role to give that holistic, end-to-end view of both supplier and contract performance.”

What This Means for Hiring Managers

The debate reveals a profession at an inflection point. Traditional job descriptions emphasize process compliance and cost savings. The emerging vision centers on speed, business alignment, and AI orchestration.

Socrates C T summarized the shift well. “Looks less like replacing procurement and more like upgrading it to ‘enterprise value edition.’”

For companies still posting category manager roles with 2015-era requirements, the message from practitioners is clear: the talent you need may not apply for jobs that sound outdated.

Edward Murphy, founder and CEO of FactorySpec, endorsed the entrepreneur concept. “Love the entrepreneur role. A must in every department if you ask me.”

Meads sees early movers gaining significant advantage. Better talent attraction. Higher retention of top performers. Several times more productivity from existing team sizes.

The question he leaves with hiring managers: which of these five roles would you hire first?

Join the conversation with procurement and supply chain professionals on Chain.NET. For AI tools designed specifically for the industry, visit Chaine.AI.

For procurement professionals, few moments are more frustrating than hearing a stakeholder declare they’ve already chosen their supplier—or worse, that they don’t need procurement involved at all.

But experienced sourcing leaders say these objections rarely mean what they appear to mean. Behind each “no” lies a more complex story about organizational trauma, misaligned incentives, and broken trust. The procurement teams that thrive are those that learn to hear what stakeholders actually fear—and respond to that instead.

“It’s not about pushing procurement,” said Eman Abouzeid recently on LinkedIn. “It’s about translating stakeholder fears into solutions.”

The Political Supplier Problem

When a marketing director insists they already know which agency they want, or when an IT leader has a preferred software vendor, procurement teams often assume they’re facing stubbornness or favoritism. The reality is usually more nuanced.

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Procurement used to be simple. You sent out a request for quotation. Suppliers responded. You picked the cheapest option. Done.

That world is gone.

Today, procurement leaders face a different reality. Seventy-eight percent report that market conditions are as unpredictable or more unpredictable than the previous year. Geopolitical shocks ripple through supply chains in days. Sustainability commitments compete with cost pressures. Quality standards vary by region. Contract terms matter as much as price.

Yet most procurement teams still use the same tools their predecessors used twenty years ago. Spreadsheets. Email. Manual scoring. Gut feel.

The gap between the complexity of the decision and the sophistication of the tools is widening. That gap is costing money. It’s creating risk. It’s burning out teams.

The Problem With Manual Sourcing

Imagine you’re sourcing raw materials for a manufacturing operation. You have ten suppliers. Each offers different pricing structures. Some offer volume discounts. Some offer longer payment terms. Some specialize in certain products. Some deliver faster.

You want to minimize cost. But you also want to diversify suppliers to manage risk. You want quality. You want sustainability. You want to understand Total Cost of Ownership, not just price.

Now add real-world complexity. Geographical coverage matters. Capacity constraints exist. Contract terms vary. You’re buying hundreds of categories with thousands of suppliers.

Spreadsheets break at this point. Email chains get lost. Decisions get delayed. Mistakes happen.

Radu Panciuc, Contracts and Innovation Manager at Samsung, describes the problem: “When you’re using spreadsheets and manual processes, you’re spending time on the mechanics instead of the strategy. You’re building the model. You’re formatting data. You’re checking for errors. By the time you finish, market conditions have changed.”

The real cost isn’t just time. It’s missed opportunities. It’s suboptimal decisions. It’s risk exposure.

The Invisible Ceiling

Here’s what procurement leaders rarely admit: They’re making decisions without seeing all the options.

When you evaluate five suppliers across five criteria manually, you’re constrained by working memory. You can compare maybe five or six scenarios before your brain gets overwhelmed. Beyond that, you stop looking.

But what if the optimal solution was the seventh scenario? Or the 50th? You’d never know.

One US technology company documented this problem. They were sourcing once annually across a category. They assumed they had optimized the decision. Then they changed their approach.

Instead of sourcing once, they started sourcing 17 times annually. Each sourcing event captured market value they were previously leaving on the table. Over 12 months, this generated $60 million in cost avoidance.

The question becomes: How do you evaluate thousands of possible scenarios when humans can barely evaluate ten?

What Smart Organizations Are Discovering

The organizations pulling ahead aren’t just trying harder. They’re thinking differently about the problem.

They’re deploying technology that can hold multiple variables in mind simultaneously and evaluate all possible scenarios instantly. This isn’t just spreadsheet automation. It’s mathematical optimization combined with artificial intelligence.

These organizations are discovering they can separate sourcing into two distinct approaches.

The first is strategic sourcing. These are complex decisions where cost is only one factor. You need Total Cost of Ownership. You need to factor in supplier reliability, quality, sustainability, and geopolitical risk. You need to run scenarios. What happens if we diversify across four suppliers instead of three? What if we extend contract terms? What if we prioritize ESG-certified suppliers?

The best organizations are deploying platforms that can instantly evaluate thousands of possible scenarios and identify which configuration best aligns with their objectives.

The second category is tactical sourcing. These are lower-value, high-volume purchase categories that are repetitive and follow consistent processes. They’re the “tail spend” that procurement teams often neglect because strategically, they’re not worth optimizing manually.

Organizations are discovering they can automate these decisions entirely. Apply company standards. Apply compliance requirements. Execute the purchase automatically. One manufacturing company documented that 93 percent of their tail spend purchases are now fully automated.

Samsung implemented this dual approach across their procurement operation. The results were significant: 85 percent reduction in time spent building, running, and evaluating RFQs. 56 percent decrease in compliance errors.

Meet Kai: The AI Orchestrator

Keelvar, an AI-first company founded by artificial intelligence researchers, has built a platform that orchestrates both strategic and tactical sourcing. Their new AI Orchestrator, called Kai, does something different from traditional procurement software.

Kai doesn’t just advise. It acts.

For strategic sourcing, Kai uses combinatorial optimization to evaluate multi-dimensional trade-offs. It factors in cost, speed, sustainability, and quality in real time. It can instantly create tailored cost formulas from a text prompt. It can automatically draft sourcing event details in seconds.

For tactical sourcing, Kai deploys automated sourcing workflows that follow a team’s best practices, approval processes, and compliance requirements.

Radu Panciuc from Samsung explains how this works in practice: “Keelvar makes complex processes simple so you can easily follow them and move through checkpoints systematically. It’s like having a second pair of eyes checking everything in a smart way that unlocks more value. You’re sure you’re not going to make a mistake.”

How This Actually Works

When you feed Kai information about your sourcing scenario, it uses mathematical optimization to evaluate all possible supplier configurations. If you have ten suppliers and need to determine optimal allocation across price, quality, sustainability, and delivery speed, Kai evaluates thousands of combinations instantly.

It then recommends or executes the decision based on your parameters.

One US technology company described the experience: “Keelvar, at the click of a button, will tell you the best-case scenario based on everything that has come through in just a few seconds.”

The consistency advantage is profound. Kai applies the same logic to every decision. No bad days. No emotional choices. No favorites with certain suppliers.

For tactical spend, Kai’s automation layer handles the repetitive mechanics. Teams no longer spend time building RFQs manually, collecting responses, and scoring options. Kai handles that. Compliance happens consistently. Approval workflows execute reliably. Error rates drop.

The Hidden Benefit: Freed-Up Time

Here’s where the real competitive advantage emerges.

When procurement teams previously spent 60 percent of their time on administrative tasks and 40 percent on strategy, those numbers flip. Now they spend 60 percent on strategy and 40 percent on administration.

That extra strategic capacity gets reinvested in supplier relationship management, market analysis, category strategy, and risk mitigation. These are the activities that actually create competitive advantage.

Most organizations report full implementation within four to six weeks. The business case typically becomes clear within 90 days.

What This Means For Your Organization

Over half of procurement teams have already adopted some form of optimization or automation. The competitive question is no longer whether to adopt these approaches. It’s how to scale them strategically.

If your procurement team is still using spreadsheets for complex sourcing decisions, you’re not just inefficient. You’re making suboptimal choices while your competitors capture the value you’re missing.

Share Your Perspective

What’s the biggest bottleneck in your sourcing process right now? Is it the complexity of decisions? The administrative burden? The consistency of execution?

We invite you to share your experience in the comments. Your insights help build understanding across the procurement community.

Join Chain.NET for in-depth discussions on procurement innovation, best practices from global leaders, exclusive events with procurement professionals, and practical resources to accelerate your sourcing strategy. Connect with peers navigating this transformation at www.chain.net.

Procurement leaders face a delicate balancing act. They need to cut costs while investing in technology. They must automate routine tasks while retaining top talent. They’re deploying AI tools at record pace while reassuring teams their jobs remain secure. This tension defines the procurement function entering 2026.

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Kimberly-Clark’s acquisition of Kenvue, the former Johnson & Johnson consumer health spinoff, closed with relatively little fanfare in the business press. Wall Street focused on synergies and market positioning. Analysts debated strategic rationale and shareholder value.

But inside procurement circles, a different conversation emerged. The deal created a procurement integration challenge of staggering scale. Two organizations. 820 procurement professionals. $22 billion in combined spend. An estimated 40,000 suppliers. Two enterprise systems. Two cultures. Two chief procurement officers.

Panos Anastasiou at McCain Foods analyzed the complexity recently on LinkedIn and his assessment reveals why mergers and acquisitions represent both the greatest opportunity and the greatest risk for procurement transformation.

The Numbers Tell the Story

Kimberly-Clark entered the deal with 400 procurement professionals managing $13 billion in spend across 30,000 suppliers. The organization runs on Coupa and Taulia for procurement technology.

Kenvue brought 420 procurement professionals managing $9 billion in spend across an estimated 10,000 to 15,000 suppliers. The company uses SAP Ariba. The workforce includes legacy employees from Johnson & Johnson plus new hires brought in post-spinoff.

Combined, the new organization employs approximately 820 procurement professionals managing $22 to $24 billion in spend across roughly 40,000 suppliers. On paper, the scale creates opportunity for leverage. In reality, the integration creates massive complexity.

The companies operate in adjacent but distinct categories. Kenvue purchases active pharmaceutical ingredients for consumer health products. Kimberly-Clark buys pulp, fiber, and stretch film for diapers and personal care products. Category overlap is limited. Supplier ecosystems barely touch.

This makes integration harder, not easier. Consolidation opportunities require deeper analysis. Systems cannot simply merge. Processes do not naturally align.

The Early Wins

Eugene Theodore, who works in strategic creative and insights, asked where the biggest early wins could come from: culture alignment, system harmonization, or supplier consolidation?

Anastasiou’s answer was unambiguous. “The biggest early wins will always be the easy tactical ones and will come from spend and supplier consolidation.”

He outlined two immediate opportunities. The next time the organization negotiates a big contract, it likely has more suppliers than needed and more spend to direct to fewer players versus the aggregate supply base. More volume equals more leverage equals higher discounts or price reduction.

The next competitive bids, e-auctions, or reverse auctions will bring more value. More players from both organizations vying for a bigger pie.

These incremental savings should fund the acquisition business case while the organization works longer-term people and process benefits in parallel.

This pragmatic approach reflects procurement reality. Leadership needs quick wins to justify integration costs. Supplier consolidation delivers visible results faster than culture change or system integration.

But the quick wins create their own problems. Consolidated suppliers gain more leverage. Competition decreases. The organization trades short-term savings for long-term dependency.

The Systems Nightmare

Technology integration represents one of the most expensive and risky elements of the merger. Kenvue runs SAP Ariba. Kimberly-Clark uses Coupa and Taulia. Both platforms handle procure-to-pay and source-to-pay processes. Both contain years of master data, taxonomies, hierarchies, and spend categories.

None of it aligns.

Kenvue’s data structure reflects pharmaceutical and consumer health categories. Kimberly-Clark’s structure reflects consumer packaged goods and personal care. The taxonomies are fundamentally different because the businesses are fundamentally different.

Someone must decide which system survives. Or whether to implement an entirely new platform. Or whether to run parallel systems indefinitely.

Each option costs tens of millions of dollars. Each option takes years to execute. Each option disrupts operations during transition.

Meanwhile, procurement professionals need to work. Requisitions must be approved. Purchase orders must be issued. Invoices must be processed. The business cannot pause for systems integration.

This creates the worst scenario. Integration projects drain resources while day-to-day work continues under pressure. Technical debt accumulates. Workarounds proliferate. Data quality degrades.

The organizations will also need to address various sub-procurement processes and tools. Keelvar for sourcing optimization. Taulia for supply chain finance. ServiceNow for workflow management. Each tool represents another integration decision. Each decision creates winners and losers among employees who invested time learning specific platforms.

The People Problem

Boris Borozan raised an additional dimension. Operating model design. Specifically how the combined function will balance global category management versus local market enablement.

He emphasized the culture challenge. “Getting two procurement teams to think beyond cost and toward shared value creation will be key.”

Anastasiou acknowledged familiarity with how one organization operates but not the other. “Global categories versus regional buyers versus local people in plants, site buyers and the like. You can’t have everything and the something you have needs to work for your footprint, your capability curve, your systems and processes and so forth. Now getting two different organizations together and getting it right. That’s one real challenge right there.”

The challenge extends beyond operating model. The merger created workforce redundancies. Two CPOs. Two category management teams. Two supplier relationship management functions. Two analytics teams. Two training organizations.

Standard merger logic suggests eliminating duplication. But which people do you keep? Kimberly-Clark’s experienced professionals who know the business? Or Kenvue’s newer hires who bring fresh perspectives?

The integration will encompass widely varying skills, locations, and experiences. Different employee grades. Different titles. Different responsibility splits. Managing this diverse workforce will be crucial, especially considering potential attrition.

High performers always have options. The uncertainty and workload increases that accompany mergers drive voluntary turnover. The organization risks losing the people it most needs to retain.

The Supplier Dilemma

Peter Hewett, who works in procurement and supply chain transformation, posed a question that often gets overlooked. “Imagine how the Suppliers feel. Who’s thinking about them?”

Anastasiou acknowledged the excellent point. He hoped both CPO offices had communicated with suppliers regarding upcoming changes and what comes next.

He outlined divergent supplier experiences. Some direct suppliers of raw materials, packaging, and ingredients are unique to one organization but not the other. These suppliers have meaningful spend and diverse product portfolios. They see an opportunity to grow.

However, for many smaller suppliers, particularly in indirect categories or generic tail spend, the merger represents more threat than opportunity. Consolidation efforts will eliminate vendors. Volume will shift to preferred suppliers. Contracts will be renegotiated with less favorable terms.

Supplier communication during mergers is notoriously poor. Organizations focus on internal integration and neglect external relationships. Suppliers receive conflicting messages from different buyer teams. Uncertainty about future business creates service disruptions. Payment terms change without warning.

The suppliers that survive consolidation often face worse outcomes than those eliminated quickly. Increased volume without increased pricing power. More demanding service requirements. Longer payment terms as finance teams extract working capital improvements.

The Broader Integration Challenge

Beyond the immediate procurement concerns, the merger requires aligning ESG goals, meeting SBTI climate targets, and harmonizing third-party risk management programs. Each area represents complex workstreams with external reporting requirements and stakeholder expectations.

The organization must also decide innovation pipelines. Which product launches get priority? Which R&D programs continue? Which supplier development initiatives survive?

Anastasiou suggested the ideal approach. “If you’re the CPO, ideally you’d like to start from the end-design, on a whiteboard and walk back to current state. See what you have too much of and too little.”

This outside-in design thinking makes theoretical sense. Determine the target state. Identify gaps. Build a roadmap.

Reality works differently. Politics determines outcomes more than logic. Integration decisions favor power bases, not optimal structures. Quick wins take priority over long-term design. Urgent problems consume capacity that should focus on important work.

The integration will take years. Some elements will never fully merge. The organizations will find equilibrium somewhere between full integration and parallel operations.

What Procurement Can Learn

The Kimberly-Clark Kenvue integration offers lessons for any organization facing merger integration.

Quick wins matter. Leadership needs visible results to justify integration costs. Supplier consolidation and category leverage deliver measurable savings faster than structural changes. Capture those wins early to build credibility and fund longer-term transformation.

Technology decisions cannot wait. Delaying systems integration creates compounding problems. Choose a platform. Build a migration plan. Execute quickly. Parallel systems drain resources and create data silos that get harder to fix over time.

People determine success. Technical integration plans fail if you lose critical talent. Communicate transparently. Provide clarity on roles and career paths. Accept that some attrition is inevitable but work to retain high performers.

Suppliers need attention. Poor supplier communication creates service disruptions and relationship damage that takes years to repair. Designate clear supplier contacts. Communicate changes proactively. Honor existing commitments while negotiating future terms.

Operating model drives everything. Global versus local. Centralized versus decentralized. Category management versus cross-functional teams. These structural decisions shape how the organization functions. Make them deliberately and early.

Culture cannot be mandated. Two organizations with different histories, systems, and approaches will not blend simply because leadership declares a new culture. Integration requires patience, consistency, and genuine respect for what each organization brings.

Most importantly, procurement transformations fail more often than they succeed. The difference between success and failure is not complexity management. The difference is leadership that can navigate politics, make tough decisions, and maintain momentum through years of difficult change.

The Kimberly-Clark Kenvue integration will serve as a case study. Either an example of how to capture merger value through strategic procurement transformation. Or a cautionary tale about complexity overwhelming capability.

The numbers suggest massive opportunity. The history suggests caution. The outcome remains unwritten.

Join the conversation on procurement transformation, merger integration, and strategic supplier management at Chain.NET, where supply chain professionals share lessons from major integrations, debate operating model decisions, and connect at events focused on building procurement capabilities that survive organizational change.

Tail spend looks harmless. Low value purchases scattered across hundreds of suppliers. One-time orders. Infrequent transactions. Nothing strategic. Nothing worth attention.

Until you calculate what it actually costs to process them.

In a recent discussion, Joël Collin-Demers, a digital procurement mentor, talked about how tail spend was often considered a low value, high volume purchasing transactions that are not generally strategic to business. They are fragmented across many different suppliers. Sort your suppliers in descending order by total spend in a graph. The shape resembles a long tail. Lots of suppliers with small amounts of spend live at the end.

The challenge is simple to state and hard to solve. The transactional cost of the purchasing process, approving a requisition, cutting a purchase order, processing an invoice, often outweighs the value of the purchase itself.

You are paying people to lose money. And most organizations do not realize it.

The Hidden Drain

Aiman Nadeem captured the deception. “Fragmented, low-value purchases look harmless until they silently inflate your operational costs and compliance risk.”

Read more

A landmark study reveals that elite procurement leaders drive 2% higher revenue growth by ditching cost-cutting for strategic influence. Here’s what separates winners from everyone else.

Procurement chiefs have spent decades trapped in a paradox. They control spending that equals half of company revenue. They touch every corner of the business. They see market shifts before anyone else. Yet only 1% of executive committee time gets dedicated to supplier issues. That disconnect is finally breaking.

A 2025 study from Inverto, a BCG company, surveyed 335 procurement executives across Europe, including interviews with more than 20 CPOs from top companies. The research reveals a stark divide in the procurement world. While most teams remain stuck in reactive, cost-focused roles, the top 22% have evolved into what Inverto calls “Impact Leaders.” These elite teams contribute to 2% higher revenue growth than their peers by proactively engaging with executives, shaping business decisions, and measuring success through company-wide metrics like revenue growth and EBITDA impact rather than just savings.

The Evolution Nobody Saw Coming

Procurement’s transformation didn’t happen overnight. The function evolved through three distinct eras that shaped its current identity crisis.

After the 1970s oil shock, cost optimization dominated everything. Procurement leaders centralized buying, built low-cost country sourcing strategies, and relied heavily on volume consolidation and negotiation as primary value levers.

The globalization and compliance era from 2005 to 2020 added complexity. As global trade expanded, procurement assumed new responsibilities. Regulatory compliance, ethics, social responsibility, and carbon impact emerged as core focus areas, layering new duties onto traditional sourcing practices.

The post-2020 strategic realignment changed the game entirely. Global crises reaffirmed procurement’s strategic importance. CPOs now get called upon to diversify supply, deepen supplier partnerships, mitigate inflation risks, and increase organizational agility. This demands executive attention that procurement isn’t getting.

The numbers tell the story. Despite procurement spend typically accounting for around 50% of company revenue, only about 1% of executive committee time currently gets dedicated to supplier issues.

The Impact Leader Advantage

The Inverto study identifies Impact Leaders through three defining characteristics. They engage proactively with the executive committee, moving beyond execution to influence corporate strategy. They prioritize agility, risk mitigation, and innovation, ensuring procurement contributes to competitive advantage. They measure success using company-wide KPIs, including procurement’s impact on revenue growth and margin, rather than just savings.

The performance gap is measurable. While only 18% of procurement teams currently position themselves as strategic advisors to the board, Impact Leaders take an active role in shaping business decisions. This strategic involvement translates to tangible results. On average, Impact Leaders contribute to 2% higher revenue growth than their peers.

The data connects revenue growth directly to procurement’s positioning and importance within organizations. Teams that combine proactive positioning with strongly rising organizational importance show revenue compound annual growth rates of 8.3% from 2021 to 2023. Teams that are reactive and losing importance show negative growth of 0.4%.

Impact Leaders are 53% more likely than other teams to contribute to innovation strategies through supplier collaboration. Meanwhile, 67% of executives reinvest procurement-driven efficiencies into AI and digital transformation, further accelerating business growth.

Beyond Cost Cutting to Growth Engine

For decades, cost savings defined procurement’s success. The Inverto study shows 51% of teams still define their core contribution as delivering cost savings. Another 59% remain heavily focused on traditional, transactional value drivers.

High-performing teams shifted the focus entirely. They contribute to faster innovation cycles for revenue generation. They enable new market development through agile supply chains and supplier ecosystems. They drive customer value creation through product innovation and quality enhancements.

The shift toward supplier-led innovation shows the magnitude of change. Today 34% of companies already rely on supplier-led innovation to drive product and service development. This signals a fundamental shift. Suppliers are transitioning from vendors to strategic partners, helping companies tap into new technologies, shorten time to market, and differentiate in competitive markets.

Among Impact Leaders, supplier collaboration rates rise even higher. These organizations actively co-develop with suppliers, host innovation days, and build long-term partnerships that go beyond procurement transactions. They recognize that real growth comes from building better with suppliers, not just buying better from them.

One CPO at a European pharmaceutical company captured the mindset shift. “We’ve stopped seeing innovation as something R&D owns alone. Our suppliers have insights and capabilities we don’t. Tapping into that unlocks faster, more efficient innovation and it keeps us ahead of the curve.”

Building Crisis-Ready Operations

Disruption has become the norm rather than the exception. Geopolitical instability, inflation, energy volatility, and regulatory shifts are now part of daily business. The ability to anticipate, absorb, and adapt to shocks has become a defining factor for business success.

The study shows 85% of executives are already addressing supply disruption from rising interest rates, regulatory change, and inflation. Yet 40% say they are not prepared to weather market shocks. Procurement sits on the front lines of this challenge.

The most advanced procurement teams take concrete steps to embed agility into operations. The study highlights three critical levers.

Supply chain diversification and risk management frameworks come first. Some 66% of Impact Leaders have already implemented diversified sourcing strategies, compared to just 49% across all teams. These organizations build resilience through multi-sourcing, dual sourcing, and risk-mapping tools, reducing dependency on single suppliers or regions.

Nearshoring and regional sourcing for stability comes next. Regionalized supply models are gaining traction, with 35% of companies reporting improved supply continuity through nearshoring. This proves especially relevant for industries facing longer lead times or regulatory constraints, like manufacturing, automotive, and chemicals.

Predictive analytics to stay ahead of risks rounds out the approach. Some 41% of Impact Leaders use automated risk monitoring and predictive analytics to identify disruptions before they escalate. These teams track real-time indicators including logistics, geopolitical signals, and commodity volatility, feeding them into dynamic scenario planning models.

A procurement leader in the aerospace sector described the mindset shift. “We don’t wait for the crisis call anymore. Our job is to see it coming and already have a response in place. It’s a mindset shift from managing risk to mastering it.”

The Path to the Executive Table

The shift from cost center to strategic driver requires more than good intentions. Procurement must reposition itself as a strategic partner by aligning with CEO and board priorities.

CEOs today focus on navigating uncertainty, managing inflation, building supply chain resilience, accelerating digital transformation, and delivering sustainable growth. To stay relevant, procurement must speak the same language.

Procurement leaders need to frame their value in terms of business outcomes, not just savings. That means highlighting revenue generation through supplier-enabled innovation, risk mitigation through sourcing agility and supply chain design, and financial performance through metrics that tie into EBITDA, margin, and long-term value.

A group CPO at a European consumer goods company explained the communication challenge. “Procurement has visibility into parts of the business others don’t. That gives us the unique ability to connect supply chain risk, sustainability, and margin improvement. But to make that impact visible, we had to start speaking in terms the CFO and CEO care about.”

The most effective CPOs today are already operating as business leaders. They’re leading transformation, navigating disruption, managing global ecosystems, and collaborating across every function. The same capabilities that define a great CPO, strategic thinking, resilience, cross-functional influence, and digital fluency, are increasingly seen as prerequisites for future CEOs.

The CEO Pipeline Nobody Expected

One of the study’s most provocative findings centers on career progression. As procurement continues to rise in strategic relevance, the next wave of CEOs won’t only come from finance or operations. They will increasingly come from procurement.

A CPO at a multinational infrastructure group captured this evolution. “I used to think my job was negotiating better contracts. Now, I’m in the room when we discuss market entry strategies, innovation roadmaps, and business model shifts. Procurement gives you a 360-degree view of the business and the credibility to lead.”

The logic is compelling. Procurement leaders have visibility into every part of the business. They manage relationships with external partners worth half of company revenue. They navigate complex negotiations requiring financial acumen, strategic thinking, and operational expertise. They build and lead cross-functional teams. They respond to market disruptions in real time.

These are exactly the capabilities boards seek in CEO candidates.

The Bottom Line

The top 22% of procurement teams prove that proactive, strategic procurement directly drives business growth. They influence executive strategy, deliver measurable business impact, and drive innovation in partnership with suppliers. Most importantly, they’ve outgrown the traditional definition of procurement as a cost center.

Their performance validates a new model. Revenue enablers, change agents, and trusted advisors to the C-suite deliver 2% higher revenue growth, deeper cross-functional integration, and stronger resilience in a volatile world.

But these teams are not outliers. They are role models proving that every procurement function has the potential to step into a strategic role if the right actions are taken.

For CPOs, that means claiming a seat at the executive table, measuring success through business-oriented KPIs, investing in innovation and agility, and building future-ready teams with cross-functional and leadership capabilities.

For CEOs and executive boards, the message is equally clear. Strategic procurement isn’t a nice-to-have. It’s a competitive necessity. Organizations that empower their procurement teams will be better equipped to anticipate disruption, accelerate growth, and deliver long-term value.

Key Takeaways

The procurement function is evolving from cost center to strategic growth engine. The top 22% of teams, identified as Impact Leaders, deliver measurably better business outcomes by engaging proactively with executives, focusing on innovation and agility, and measuring success through company-wide metrics rather than just savings.

Supplier-led innovation has become a critical competitive advantage. Some 34% of companies already rely on suppliers to drive product and service development. Impact Leaders are 53% more likely to contribute to innovation strategies through supplier collaboration, recognizing that growth comes from building better with partners, not just buying cheaper from vendors.

Supply chain resilience requires proactive design, not reactive firefighting. Impact Leaders are 66% more likely to have implemented diversified sourcing strategies and 41% use predictive analytics to identify disruptions before they escalate. In a world where 85% of executives face supply disruption but 40% admit they’re not prepared, this capability separates winners from everyone else.

How is your procurement function positioned in your organization? Are you measuring success through cost savings or business impact? What’s holding your team back from claiming a strategic seat at the executive table? Share your experience in the comments below.