Geopolitics is revolutionizing procurement

The world of procurement is undergoing a revolution. And not only does AI have nothing to do with it, it won’t help with this revolution at all!

The world is witnessing a chaotic geopolitical landscape. This affects various suppliers globally, and the result is heavy price fluctuations and episodes of scarcity. A prime example is the extreme volatility in global fertilizer prices following the Russia-Ukraine war.

What are companies doing to protect themselves? They are shifting their focus from an looking exclusively at savings to resilience. In practice, this means:

Larger safety stocks
Dual or multiple sourcing strategies
Including risk in supplier selection analysis (instead of just looking at price)
Creative contracts (with triggers for volatile situations)

Procurement has gained new responsibilities. The role of the CPO has leveled up. But how will this evolve? Here are three predictions:

AI won’t help in this revolution. At least not in the next 3 years. While AI is already very useful (e.g., transactional negotiations), it still struggles to make decisions in complex, high-stakes scenarios.
Teams will use risk as a core metric. It will stop being a one-off consideration for a specific supplier and become a permanent part of spend analysis, right alongside savings—much like how investors have used "risk-return" profiles for years.
Risk assessment “pods” will emerge. These will be multi-functional teams focused on critical categories, continuously evaluating the risks of supply chain disruption.

Procurement will stop being a purely efficiency-driven department and become responsible for "capital allocation." Companies that are slow to realize this will learn the hard way during the next major disruption.