2024 has already begun with supply chain disruptions, with Houthi attacks in the Red Sea forcing global supply chains to reroute around Africa, bypassing the Suez Canal. Plus, elections in over 60 countries stands as a pivotal political year – the turbulence from 2020s is unlikely to wind down soon.

Amid rising supply chain costs, pressure to reduce environmental impact, rapid digitization, and complex energy transitions, these challenges can be drivers of positive change.

With the right strategies and a commitment to action, procurement functions can overcome these challenges. 

Here, we explore 5 key trends that procurement teams should embrace to strengthen their sustainable practices in 2024 and beyond.

1. Emphasis on supply chain transparency

The trend towards supply chain transparency began with companies aiming to enhance operational efficiency and reduce costs by improving internal visibility throughout the supply chain.

As consumers increasingly prioritize ethical and eco-friendly purchasing decisions, companies have leveraged this visibility to showcase their commitment to social responsibility and ethical procurement.

Supply chain visibility refers to a company’s ability to monitor and track activities across the supply chain, from sourcing practices to the delivery and final use of products.

This visibility enables companies to be transparent about their operations, sharing information with stakeholders to meet consumer demands, achieve regulatory compliance, and foster trust.

The growing demand for transparency is influenced by consumers’ concerns about the impact on the environment, including the carbon footprint and carbon emissions.

By integrating sustainability into their supply chain practices, companies can address these concerns and demonstrate their commitment to a more sustainable future.

2. Employing tech in decision-making

The adoption of digital procurement technology is set to accelerate with a particular emphasis on advancements in AI, software, blockchain. They are crucial in implementing sustainable procurement initiatives and achieving a greener supply chain.

A 2023 survey of global supply chain leaders showed that 73% of supply chain technology budgets are expected to be allocated to growth and performance enhancements.

Among these, actionable AI is the most sought-after technology, instrumental in streamlining procurement processes and making informed procurement decisions.

This trend highlights the need for comprehensive supplier data collection, updating, and analysis – all are essential to meeting sustainability goals.

Utilizing procurement management software integrated with a global database of suppliers allows organizations to filter suppliers based on various ESG criteria.

One AI-powered database is our tool, Ditchcarbon – offering advanced support for sustainable solutions.

While investment in digital transformation will continue to grow in 2024, technology alone is not the complete solution. To truly achieve sustainable procurement, technology must be implemented alongside effective processes, structured frameworks, and capable personnel.

This holistic approach will help navigate the ever-changing procurement landscape and advancing the procurement journey toward sustainable development.

3. Implementing green procurement practices 

The adoption of green procurement practices is rising.

Also known as environmentally sustainable procurement or green supply chain management, this approach involves sustainable sourcing of goods and services that have a reduced environmental and social impact.

Here are some key factors in green procurement that your team can consider.Sustainable procurement is a strategic approach that considers factors like renewable energy purchases through Power Purchase Agreements (PPAs) to lower the carbon footprint and demonstrate a commitment to sustainability. It also involves selecting materials that are recyclable to minimize waste and verifying supplier compliance with standards like ISO 14001 for effective environmental management.

When you adopt sustainable practices throughout the value chain and consider the entire lifecycle of products, you can achieve successful sustainable procurement.

4. Embrace supplier diversity

As procurement and supply chain management continue to evolve, risk and resiliency remain at the forefront for leaders.

The volatility in shipping markets and limited airfreight capacity – as airlines recover from pandemic losses – prompt the need for supply chain resilience. Add that with global geopolitical tensions and ongoing conflicts, oil markets face instability, and protectionism is on the rise.

Organizations are increasingly moving to diversify their supply chains to enhance resilience. This includes strategies like near-shoring or re-shoring while maintaining relationships with established sustainable suppliers.

In doing so, procurement teams must have new suppliers comply with regulations such as modern slavery laws and align with net-zero goals.

To minimize and mitigate risk, procurement leaders need a comprehensive view of their supply chain vulnerability and exposure.

Achieving supply chain visibility and building resilience requires investment, and companies must decide how to fund these initiatives. Options could include absorbing costs, sharing them with suppliers, or adjusting prices for customers.

Having supplier diversity and sustainable procurement initiatives can create a more resilient and sustainable supply chain that aligns with broader sustainability goals and contributes to a more sustainable future.

5. Fostering circular economy in supply chain management

Imbedding circularity involves applying the principles of the circular economy to procurement practices.

What does that mean?

This is how the European Union defines it:

“The circular economy is a model of production and consumption, which involves sharing, leasing, reusing, repairing, refurbishing and recycling existing materials and products as long as possible.”

Therefore, in principle, this leads to extending entire life cycle of products, and recycle to reduce waste to a minimum. 

This provision means that sustainable procurement overlaps with circular procurement, with both focusing on sustainability by minimizing waste within the supply chain.