Procurement decisions across manufacturing and engineering sectors are undergoing significant change, according to Matt Hale, global business development director at HRS Heat Exchangers.
Hale says that over the past decade purchasing has evolved from a relatively straightforward process focused on price and performance into a far more strategic corporate function.
“Previously the goal was largely to achieve the best outcome in terms of technical performance and cost,” Hale says. “Today every purchase also needs to support wider business objectives around compliance, sustainability, governance and operational performance.”
He says the growing complexity of procurement reflects the number of stakeholders now involved in purchasing decisions.
“One estimate suggests that the average business-to-business procurement committee now includes up to 13 people,” Hale says. “That can involve representatives from IT, finance, sales, procurement, legal, product development, operations, engineering and senior leadership.”
“As a result, the role of Chief Procurement Officers has shifted. It’s less about approving suppliers and more about managing the expectations and priorities of multiple departments, often within the same historic budget.”
This shift is placing new expectations on suppliers, Hale says.
“Providing the best technical solution at a competitive price is no longer enough. Suppliers now need to understand the broader requirements of the organisation and the different priorities influencing the final purchasing decision.”
The changing priorities are reflected in procurement surveys. A Deloitte survey of chief procurement officers in 2018 identified cost reduction, new product development and risk management as the top priorities. By 2023 the focus had shifted to operational efficiency, environmental and social governance (ESG) objectives and digital transformation.
“Sustainability has moved from being a peripheral consideration to a core element of procurement strategy,” Hale says. “That shift affects every stage of the value chain and raises new expectations for equipment suppliers.”
Hale says collaboration between suppliers and customers is becoming increasingly important.
“Rather than focusing purely on price negotiations, many companies are now working with suppliers to develop sustainability roadmaps and explore improvements in areas such as energy efficiency, traceability and emissions reduction.”
This collaborative approach can also help address Scope 3 emissions, which are often influenced by supplier technologies and processes.
Another major influence on procurement is the rapid development of digital tools and artificial intelligence.
“A recent survey by Icertis found that 44% of organisations are already using AI to support contracting workflows, including shortlisting suppliers, reviewing contracts and summarising documentation,” Hale says.
“More than half of executives surveyed also expect AI agents to begin negotiating supplier and customer deals within the next 12 months.”
Despite this rapid adoption, Hale says many organisations remain cautious.
“More than half of respondents in the same survey raised concerns about the quality of data outputs, while 44% said they lacked sufficient trust in fully autonomous systems.”
For manufacturers purchasing complex processing equipment, he says an over-reliance on automated decision-making could be risky.
“In sectors such as food production, pharmaceuticals or environmental protection, decisions often require multiple layers of oversight and technical validation,” Hale says. “Reducing those decisions to an AI-driven box-ticking exercise could undermine efficiency and expose businesses to unnecessary risk.”
Instead, Hale believes the most effective procurement strategies will combine digital tools with strong human expertise.
“AI will not replace procurement,” he says. “But it will change it. Organisations that combine good data foundations, well-governed processes and experienced technical teams will be best positioned to make effective purchasing decisions.”
Ultimately, Hale says successful procurement requires clear communication across all stakeholders.
“When multiple departments are involved in a decision, it becomes even more important that the right people are speaking to the right people,” he says.
“Engineers, finance teams, sustainability specialists and procurement professionals all bring different insights. Bringing those perspectives together is what allows organisations to make purchasing decisions that deliver long-term value.”