6 Steps to Creating an Effective Procurement Strategy in 2025

As society grapples with record inflation and high market volatility, businesses must deploy effective strategies to beat their competition. A robust and effective procurement strategy aligned with business goals has helped entire industries re-emerge from an economic downturn stronger, agile, and more resilient. We know because it happened in 2008.

Change The Game With Your Procurement Strategy

Procurement has changed a lot since the global financial crisis. At that time, a contraction in demand across many industries confronted the global supply chain, almost leading to collapse. The companies that survived leveraged innovation to react swiftly and decisively.

More recently, the pandemic shed light on the flaws of traditional operating models, and remote work disrupted established corporate culture. The shortcomings have been made more visible by a supply chain crisis sparked by the Russian invasion of Ukraine.

Traditional sourcing focuses on cost reduction through supplier competition. If you can't beat top-performing competitors, you should consider joining them. You may wonder how. Embrace innovation, emphasize collaboration, and drive a shift toward strategic procurement across your organization.

What is Procurement Strategy?

Procurement strategy refers to long-term planning that enables buyers to acquire goods and services of favorable quality at the right time without overstretching their resources. A good procurement strategy helps build strategic relationships with suppliers and leverages purchasing power where possible to achieve favorable terms for the parties involved.

“Procurement strategy is a long-term plan to ensure cost-effective, high-quality purchases from competitive suppliers on favorable terms.”

The Industry Standard

In the new normal, standard procurement strategies may not be enough to achieve your business goals. This does not mean that we should ignore the basics. After all, winning strategies are built on a strong foundation.

So what are the foundational components of procurement strategy? Do we examine core processes, tools, or activities?

First, let’s examine the types of procurement processes:

• Upstream procurement strategy – covers everything between sourcing and contract award
• Downstream procurement strategy – covers everything that occurs after the contract is awarded

Steps to Create a Procurement Strategy

1. Assess your current procurement process – what does spending look like upstream? Collect and analyze data to gain insight and improve spend visibility.
2. Align business needs with global strategy – what are the business needs, and are they aligned with the current strategy? Now armed with data, search out the unsolved needs.
3. Set business objectives – can you balance your ambition with the available resources? By now, you know the needs and regularly uncover inefficiencies. You digest data on spend. Now make sure the objectives and KPIs are both realistic and attainable, then prioritize them.
4. Outline procurement strategy – create your long-term plan. Involve both internal and external teams.
5. Digitize and automate downstream – have you embraced technology? Downstream procurement processes are often repetitive. Automate where you recognize a clear value.
6. Train, execute and refine strategy – can you and your procurement team stay open-minded? People implement strategies. Train, upskill, and motivate your team to evaluate procurement processes, tools, and activities. Define clear procurement policies to guide your team.

"Make sure the objectives and KPIs are both realistic and attainable, then prioritize them."

Why you should act

A majority of procurement managers and purchasing directors are aware that technology can be used to drive effective procurement strategy, yet they do nothing. Only a few recognize innovation as vital to success. Therefore most managers do not dedicate adequate resources to help overcome initial challenges. This is the single biggest advantage you have.

The bottom line is that strategic procurement allows businesses to build a solid foundation to experiment and discover ways to create value. There is no universal solution, and the complex process must be aligned with your company’s goals, needs, and culture.

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Northfield fosters continuous innovation to transform the global supply chain by providing unrivaled end-to-end global procurement, logistics, production, and supply chain management solutions.