Procurement’s Sustainable (R)evolution:
Procurement has evolved into a strategic powerhouse capable of shaping sustainability, innovation, and business growth. In a recent discussion of McKinsey Talks Operations, Mauro Erriquez, McKinsey senior partner, and Dominique Lebigot, chief purchasing officer (CPO) of LVMH Wines and Spirits, , explored how procurement is adapting to a volatile global market while leveraging trends like circularity and AI to drive value.
Key Takeaways
1. Procurement as a Strategic Driver
Procurement is no longer just about managing tenders or negotiating prices—it’s a central function that shapes business growth and sustainability. From optimising supply chains to reducing carbon footprints, procurement teams are redefining their role to stay competitive.
2. Circular Economy: A Game Changer
The circular economy offers transformative potential by shifting from selling products to leasing services. For instance, instead of selling physical products, businesses could lease them as services, enabling recycling and reuse. This approach reduces waste, improves ROI, and aligns with sustainability goals.
3. The Role of AI in Procurement
Artificial intelligence is automating transactional tasks like tender management, allowing buyers to focus on strategic activities such as managing supplier ecosystems and generating revenue. This evolution requires procurement teams to develop leadership and influencing skills to effectively manage these ecosystems.
4. Localisation and Relocalisation
Global supply chain challenges and sustainability priorities are driving companies to localise sourcing. While this shift may increase costs, it supports circular economy initiatives and reduces carbon footprints. To succeed, businesses must innovate in product design to extend lifecycle value.
5. Balancing Innovation and Volatility
Procurement teams face the dual challenge of fostering innovation while managing volatile supply chains. Aligning procurement strategies with sustainability goals and using digital tools to monitor costs and emissions are critical for success in this area.
6. New Skills for Future Buyers
Procurement professionals must transition into ecosystem managers who foster collaboration among suppliers and customers. This requires a shift from traditional negotiation to leadership and influencing, with a focus on creating value across the supply chain.
The Road Ahead
The next decade will see procurement transition further into a role that balances sustainability, cost optimisation, and business growth. By embracing technologies like AI, enabling circular practices, and fostering supplier partnerships, procurement can become a critical driver of both competitive advantage and environmental responsibility.
As Erriquez and Lebigot highlighted, the future belongs to those who take the lead in organising the circular economy and leveraging collective intelligence.
Explore the full conversation by listening to the podcast or downloading the article for deeper insights at the link: https://www.mckinsey.com/capabilities/operations/our-insights/procurements-sustainable-revolution
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