(Almost) Everything You Need to Know about Procurement Transformation

Procurement functions are pursuing digital transformation, and many of these improvements and upgrades have implications on indirect tax compliance. Tax and procurement teams are both ploughing ahead with the adoption of artificial intelligence (AI) tools, for example.

As my colleague Larry Mellon – a Tax Director in Vertex’s Chief Tax Office – reported last summer, many procurement groups are:

• Leveraging advanced analytics and related digital tools to improve sourcing and vendor performance management activities
• Finding new ways to boost operational efficiency
• Working diligently to be seen as a value-generating function as opposed to a cost centre

These transformational activities have continued this year even as procurement teams embrace new tools and approaches, including data orchestration (also referred to as supply chain orchestration), strategic sourcing and structural adjustments.

“Think of orchestration as the conductor of an orchestra—coordinating different instruments (systems) to create a harmonious performance,” according to a Forbes rundown of 2025 procurement trends. “Rather than forcing all procurement processes into a single antiquated system, orchestration allows organizations to integrate their preferred tools while maintaining centralized control.”

Some companies are assigning procurement professionals to work inside business units via an embedded structure that enables improved issue-spotting and more responsive support. Similarly, tax professionals are sometimes embedded, at least part-time.

Strategic sourcing involves a combination of processes and systems designed to equip organisations with more detailed and increasingly real-time understandings of suppliers’ financial health, ability to overcome supply chain disruptions, prices, quality performance and business continuity management capabilities. A Protiviti article identifies data cleaning, spend analysis, category management, supplier onboarding, supplier performance management and proactive planning as key enablers of a strategic sourcing capability.

AI solutions are also driving procurement transformation: 64% of procurement leaders surveyed by The Hackett Group expect Gen AI applications to “fundamentally change” how their teams operate within the next five years. This research also describes the following objectives as the top five 2025 procurement priorities:

1. Improving spend reduction
2. Ensuring supply continuity
3. Transforming the operating model
4. Combatting inflationary pressures
5. Pursuing digital transformation

The need for these and related procurement changes is unlikely to subside any time soon: recent PwC survey research indicates that 91% of operations and supply chain leaders expect to “significantly change” their supply chain strategies due to tariffs and related U.S. trade policy changes.