Procurement departments in the energy industry must stay vigilant regarding changes in the political and legal environments and be ready to adapt their strategy when changes happen.

FREMONT, CA: The evolving U.S. political and regulatory environment is changing the energy landscape. It highlights the effects of nationalism vs. globalism, border adjustment taxes, potentially mitigated regulations, and reduced corporate taxes on this segment. Besides, this report comprises a discussion of declining nuclear ambitions, growth of renewables, and the deepening natural gas glut. The objective is to offer insight to category managers looking to guide their procurement function and continue to offer value in a time of significant uncertainty.

Procurement firms in several utilities have significantly advanced their potentials in the past decade, introducing strategic sourcing concepts and enhancing management of spend, suppliers, and contracts. The increasing adoption of procurement-specific technology has assisted these firms in gaining complete and manageable information, adding both speed and accuracy to the process. These innovations have occurred within a period of relative stability and consistency.

Procurement organizations require developing management skills focused on agility, flexibility, data, and automation. Procurement experts are expected to be knowledge workers, looking way beyond the linear buyer-seller relationship and reaching far into the supply chain and the markets in which suppliers function. Procurement directors have been waiting for a time when they could become part of the strategic conversation in the executive suite.  While it is essential for procurement to align with management’s priorities, it is also needed to develop the complete enterprise-wide spend under management. This would assist procurement to retain its status as a strategic partner and reduce the chances of its role reverting to merely tactical.

Energy companies large and small are highly susceptible to changes in their industry. Understanding and adapting to these external forces is vital for any enterprise’s success. Sourcing and procurement are upstream in the supply chain, often causing them to be hit first with these changes and forcing them to navigate new hurdles to stay competitive.

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