Strategic procurement in Automotive
The automotive industry is navigating structural shifts on multiple fronts: from the transition to electric mobility and global trade instability to margin compression and intense cost competition. In this context, procurement is no longer a tactical lever—it is a decisive force in shaping enterprise resilience, innovation, and profitability.
Turning Procurement power into boardroom impact
The following interview is part of our CPO Survey series, where we combined responses from over 330 procurement leaders with deep qualitative interviews across sectors. This anonymized conversation features a senior executive from the automotive supply industry who successfully positioned procurement as a core business driver—supporting 30% revenue growth in the last 7 years.
It explores how procurement is evolving into a driver of enterprise value through targeted cost transformation, selective risk mitigation, and capability development—at a time when global complexity demands both speed and structure.
We operate in a highly cost-sensitive environment—procurement represents the largest lever on our margin. Yet external volatility makes that margin harder to protect: transport route instability, inflation in key input materials, and the ongoing uncertainty in regions like East Asia and North America.
At the same time, we face internal cost pressure. This year alone, we’ve reduced our procurement overhead significantly—streamlining global teams while reinforcing strategic roles. We’ve restructured locations to reflect a more globally distributed sourcing model, and we’re automating wherever possible.
We’ve moved away from theoretical “full resilience” and toward prioritized, risk-weighted measures. For example, we apply selective dual sourcing in high-risk categories, build buffer inventories only where cost-benefit logic holds, and collaborate closely with suppliers to increase early warning signals.
We’ve also invested in supply chain transparency pilots with OEM partners to strengthen upstream visibility. But cost remains a limiting factor—many resilience tools are difficult to scale without customer buy-in.
We’re implementing an integrated procurement suite to replace more than 100 legacy tools and Excel trackers. This will allow us to manage both direct and indirect spend through one unified platform.
The value isn’t in automation alone. It lies in standardizing data, improving supplier performance transparency, and enabling faster decision-making. But we’re clear-eyed: digital success depends as much on mindset and capability as on technology.
We’re moving away from a one-size-fits-all training model. Instead, we’re targeting development based on role and maturity—particularly in strategic functions.
A strong focus is on strengthening commercial acumen, data fluency, and risk awareness across the team. In parallel, we’ve created global communities around key commodities to scale best practices faster. The ultimate aim is clear: buyers who can speak the language of the business—not just procurement.
Procurement will become a true driver of enterprise value—especially in industries with high material cost shares. The expectation is shifting: procurement needs to shape product cost from day one, proactively manage risk, and be able to demonstrate impact on growth, resilience, and innovation—not just savings.
To achieve that, procurement must have a stronger voice in early-stage product development and a closer alignment with commercial strategy. In some setups, I believe even a combined procurement and sales board responsibility could emerge—to jointly manage contribution margin.
For the complete analysis of survey results, strategic implications, and a roadmap for impact-driven procurement leadership, explore our CPO White Paper.
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