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With global disruptions, rising costs, and mounting pressure for sustainability, businesses face greater challenges than ever before.

How can procurement teams help them stay competitive in such a rapidly evolving landscape?

The answer lies in embracing key strategic sourcing trends—from AI-driven tools to sustainability and beyond.

In this article, we’ll explore these trends and how they can give your company a competitive edge.

AI-Driven Procurement Evolution

Without a doubt, artificial intelligence (AI) is everywhere right now.

Its seemingly rapid evolution has been fueled by generative AI (GenAI), which can perform tasks once thought to require human intelligence.

But two things are important to keep in mind:

First, AI isn’t new.

Machine learning (ML), a subset of AI, has been used in procurement software and other business systems for years to automate mundane, repetitive tasks.

Second, AI won’t be replacing humans anytime soon.

While AI can process vast amounts of data and generate insights, human expertise is still essential for verifying, interpreting, and applying those insights effectively.

As Fred Pinto, an IP, technology, and venture lawyer, explains:

Illustration: Veridion / Quote: Entrepreneur

His point highlights a key reality: AI is a powerful tool, but it requires human oversight to ensure its outputs are reliable and strategically sound.

This is why AI isn’t replacing procurement professionals—it’s redefining their role and enhancing their decision-making rather than eliminating the need for it.

So, how is AI reshaping procurement?

For starters, it streamlines key procurement processes, including supplier identification, evaluation, negotiation, and risk management.

Take negotiations, for example.

Companies with hundreds or even thousands of suppliers often lack the time to negotiate every contract fully, leaving untapped opportunities on the table.

To address this, Walmart, the retail giant, deployed an AI-powered negotiations chatbot.

Here’s what it has achieved so far:

Illustration: Veridion / Data: HBR

Of course, these results weren’t achieved without incentives.

To secure discounts or extended payment terms from suppliers, Walmart has:

• Offered more secure, longer contract termination periods
• Selectively increased contract volume or expanded product assortment

Suppliers who successfully closed deals appreciated the chatbot’s approach, particularly the flexibility to take their time considering offers and the ability to make counteroffers.

Ben Garisto, CEO of MIWE, a bakery equipment producer, highlighted another advantage:

“During in-person negotiations, you do not always have the questions in advance, and you are responding in real time.”

AI-led negotiations are just one example of how AI is reshaping procurement.

Other AI-driven advancements in procurement include:

Procurement Area	How AI Is Transforming It
Predictive Analytics	Analyzing historical data to forecast demand, pricing trends, and potential supply chain disruptions.
Supplier Discovery	Providing search tools that identify and vet potential suppliers faster and more accurately.
Risk Management	Analyzing real-time data to detect early signs of supplier instability, geopolitical risks, compliance issues, etc.
Contract Management	Assisting in drafting, negotiating, and reviewing contracts to improve efficiency and ensure compliance.
Procurement Automation	Handling repetitive tasks like purchase order processing, invoice matching, and approval workflows.
Spend Analysis	Categorizing and analyzing company spending, uncovering inefficiencies and cost-saving opportunities.

Despite AI’s versatility, it’s crucial to distinguish between well-established, field-tested AI technologies and newer, still-evolving GenAI models.

For example, while Walmart’s negotiations chatbot is a secure, internal tool trained on specific scenarios, ChatGPT is not.

That’s why Walmart recently warned employees against sharing confidential data with ChatGPT, as it could inadvertently use that data in future responses.

Source: Business Insider

This highlights the data privacy risks of public AI models, along with regulatory concerns over the copyright of their training data.

Additionally, AI can suffer from algorithmic bias—systematic errors caused by flawed or incomplete training data.

If not managed, this can lead to skewed supplier evaluations, unfair contract terms, or inaccurate risk assessments.

This is a genuine concern for more than half of procurement professionals surveyed by Keelvar.

Illustration: Veridion / Data: Keelvar

While these concerns are valid, AI’s potential to transform procurement is undeniable.

That’s why it’s important to approach AI with an open mind—embracing its capabilities while remaining cautious about its limitations.

With the right human oversight, AI has already proven to be a valuable tool for various procurement applications.

As we’ll see next, one of these applications is helping companies find sustainable suppliers.

Focus on Sustainability in Supplier Selection

Sustainable sourcing isn’t a new trend.

For years, government regulations, investor expectations, and shifting consumer demand have been pushing companies to prioritize sustainability in procurement.

As a result, businesses are rethinking supplier relationships and incorporating sustainability metrics into their sourcing strategies.

But while setting environmental, social, and governance (ESG) criteria for suppliers is one challenge, another remains: finding and verifying suppliers that meet these standards.

On that note, Amazon Business’s 2024 State of Procurement Report found that over 80% of companies have trouble identifying suppliers that fit their sustainability criteria.

Illustration: Veridion / Data: Amazon

Effectively tackling this challenge—especially when sourcing sustainable suppliers across global markets—requires AI-driven sourcing tools.

The right supplier data platform can provide valuable insights to guide sustainable sourcing decisions, but not all platforms offer the same reach.

Some have limited supplier databases, restricting your search scope.

Others, like our Veridion, use AI-powered bots to constantly scan the entire internet, collecting real-time data on all businesses with an active online presence.

This gives you a truly global reach.

Source: Veridion

With Veridion’s AI-driven data engine, your procurement team can:

• Quickly find eligible suppliers that meet the set sustainability criteria
• Use market intelligence to benchmark identified suppliers against others
• Leverage risk insights to assess sustainability, ethics, and other risks
• Enrich the profiles of your current suppliers with the latest ESG data

These capabilities help your team overcome key challenges in selecting truly sustainable suppliers.

For example, they make it easier to detect and avoid greenwashing—where suppliers misleadingly present themselves as environmentally responsible without real action.

By leveraging Veridion, you can go beyond surface-level claims by filtering potential suppliers based on specific ESG criteria, such as their sustainability policies and past ESG controversies.

Source: Veridion

Although ESG risks can emerge after supplier selection—and should be continuously monitored—having accurate sustainability data from the outset helps prevent costly mistakes.

Additionally, real-time supplier data on pricing, sustainability, and other factors makes it easier to balance cost-effectiveness with responsible sourcing.

Despite the complexities involved, sustainable sourcing is no longer just a trend—it’s a long-term priority for more than 70% of companies.

That’s why setting clear metrics and leveraging advanced sourcing tools to select and monitor sustainable suppliers is essential going forward.

Supplier Diversification

Supplier diversification is another long-standing trend in strategic sourcing.

It involves distributing the supply of identical or similar products, components, or materials across multiple suppliers in different regions or countries.

While this approach adds complexity to supplier management, the benefits of reducing reliance on a single supplier or geographic area far outweigh the challenges.

In essence, supplier diversification serves as a safety net, helping companies mitigate supply chain disruptions caused by:

• Imposed tariffs and trade wars
• Geopolitical conflicts and regional instability
• Natural disasters, extreme weather, and climate change
• Supplier bankruptcies, financial instability, or own supply shortages

That’s why, according to a 2024 CIPS survey, nearly 70% of supply chain leaders are already implementing supplier diversification.

Illustration: Veridion / Data: CIPS

As highlighted, ensuring supply chain continuity remains the primary driver behind supplier diversification.

More specifically, strategic multi-sourcing helps organizations mitigate risks by securing alternative or backup suppliers across multiple regions.

Take vanilla—the second most expensive spice in the world.

Companies that relied solely on suppliers in Madagascar, the world’s leading producer, faced serious supply chain disruptions when Cyclone Gamane devastated local farms.

Prossy Tumushabe, Director at VANEX, a Ugandan vanilla exporters’ association, says weather events like this and other unexpected factors make single-sourcing vanilla risky.

She adds:

Illustration: Veridion / Quote: Supply Chain Dive

So, in the aftermath of the Madagascar cyclone, organizations that were already sourcing vanilla from other countries like Indonesia, China, Mexico, or Uganda were able to maintain supply and avoid major disruptions.

In short, strategic diversification—combined with fostering strong supplier relationships—helps companies hedge against all the potential disruption risks mentioned above.

While industries like semiconductors, pharmaceuticals, and automotive are typically considered particularly vulnerable to supply chain shocks, no sector is immune.

This is why supplier diversification is not a passing trend but a key strategy that ensures companies are better prepared for whatever the future may bring.

Shift Toward Nearshoring

For some time, companies seeking to source or manufacture closer to home—without compromising cost efficiency—have turned to nearshoring.

The shift is driven by factors like long delivery times, rising labor costs, fluctuating trade regulations, or over-reliance on distant overseas markets.

As a result, nearshoring is fueling the growth of new regional trade hubs.

For example, EU businesses are increasingly relying on Eastern Europe, while US companies are turning to Latin America.

To illustrate, here’s the World Bank’s projection of which Latin American countries stand to benefit the most from nearshoring.

Source: Biz Latin Hub

Admittedly, some companies nearshoring to Mexico (or Canada) are currently facing tariff-related cost pressures with an uncertain outcome.

However, since businesses generally prioritize cost efficiency, they are more likely to shift to another near-shore country than reshore to the US.

Another motivation for nearshoring is that many governments offer incentives and tax relief to attract manufacturing operations.

For instance, the EU provides a range of incentives, as Brian R. Smith, EY Global Incentives Leader, explains:

Illustration: Veridion / Quote: EY

He adds that while various industries can benefit, European governments are particularly focused on attracting semiconductors, hydrogen, electric vehicles, and battery production.

Additionally, nearshoring reduces over-reliance on Asian markets—especially China, which is faced with its own set of trade restrictions and tariffs.

Beyond this, other key benefits of nearshoring include:

• Reduced dependency on long-haul logistics
• Increased resilience against supply chain disruptions
• Aligned time zones, cultural similarities, and business practices

As global supply chains remain volatile, nearshoring continues to gain traction as a strategic solution for balancing cost, resilience, and operational efficiency.

With some countries actively supporting this shift, this trend is expected to shape the future of manufacturing and sourcing in key industries.

Increased Use of Digital Platforms

Before the present AI hype, advancements in machine learning and other technologies have accelerated the adoption of digital procurement platforms.

Cloud-based procurement ecosystems are rapidly replacing outdated, fragmented systems, allowing teams to:

• Collaborate in real-time
• Centralize all supplier data
• Shorten procurement cycles
• Automate compliance tracking

The biggest advantage of these platforms is automation—eliminating repetitive manual tasks and freeing up time for more strategic efforts.

Another key benefit, highlighted in the aforementioned Keelvar survey, is improved supplier visibility.

With better insights, procurement teams can leverage competition more effectively during negotiations.

Illustration: Veridion / Data: Keelvar

These advantages—further amplified by AI—are transforming procurement from a cost-cutting function into a strategic, data-driven discipline.

For example, spend analysis tools and communication platforms break down silos and foster collaboration between procurement, finance, operations, and other key departments.

This enables sourcing teams to better understand long-term business needs and identify suppliers suited for lasting partnerships.

Meanwhile, other digital platforms enhance decision-making by predicting demand based on historical data, conducting risk assessments, and providing real-time supplier insights.

Source: Veridion

Regardless of their function, these platforms empower teams with even deeper visibility into potential risks and opportunities.

Together, they enable smarter, data-driven sourcing decisions based on comprehensive insights rather than short-term cost considerations.

With the right combination of digital tools, management buy-in, and staff training, procurement moves beyond cost reduction.

It becomes a driver of long-term value, risk mitigation, and competitive advantage through strategic, mutually beneficial supplier partnerships.

Conclusion

The trends we covered highlight a clear shift in strategic sourcing practices.

AI-driven tools and digital procurement platforms are enabling a stronger focus on sustainability, supplier diversification, and nearshoring—key strategies for proactive risk management.

Procurement teams that embrace these shifts will be better positioned to navigate disruptions, optimize costs, and build long-term supply chain resilience.

As the landscape continues to evolve, now is the time to evaluate your sourcing strategy and leverage these trends to drive your company’s success.