Why is your category strategy beginning to look increasingly untenable? Inflation - unless you shield your procurement strategy.
Budgets that were initially set based on assumed costs are now being squeezed as inflation in the U.S. remains uncomfortably high.
We’re currently in an economic data blackout due to the government shutdown, but the annual inflation rate stood at 2.9% as of August 2025, surpassing the Federal Reserve's target of 2%. Although inflation has decreased from its post-pandemic peak of over 9%, businesses continue to feel the pressure of rising costs.
The impact on procurement? Category managers are watching in horror as their once-impressive cost savings are eroded, and the bottom line suddenly doesn’t look so healthy any more.
CFOs, however, are not helpless in this situation, with several levers available to mitigate inflation's impacts on the business. These include budget adjustments, cost-cutting measures, hedging strategies, dynamic pricing strategies, finding operational efficiencies, and supply chain diversification. You will not surprised to learn that the procurement team has a significant role to play.
But how can you find savings (fast!) when the CFO is leaning on procurement for meaningful results to combat inflation today, not months down the track? The key is to shield procurement strategy with a mix of proactive planning, supplier diversification, and data-driven decision making.
Strategies to Combat Rising Costs
1. Diversify Supplier Base
One effective way to counteract inflation is by not putting all your eggs in one basket. Expanding your supplier base can help you find better deals and alternatives. When prices rise with one supplier, having others to turn to can give you leverage in negotiations and keep costs from spiraling out of control. In other words, diversification helps shield your procurement strategy from overreliance on any single supplier or region.
2. Long-Term Contracts
Locking in prices through long-term contracts can be an excellent way to shield against future price hikes. While this requires some foresight, it can provide a cushion against the volatile market. Just make sure to include clauses that allow for flexibility in case of unforeseen circumstances.
3. Negotiate with Suppliers
Don’t shy away from having tough conversations with your suppliers. Open communication about your budget constraints can lead to creative solutions, such as tiered pricing structures or bulk purchase agreements that can help spread costs over time. Suppliers may be more willing to negotiate than you think, especially in a competitive market. Be reasonable, though. Inflation has such a powerful ripple effect from raw material prices all along the chain to the final consumer. Suppliers have every right to raise their prices to stay afloat, just as your business is no doubt doing as well.
4. Utilize Data Analytics
Leverage analytics tools to get a better handle on your spending patterns. Analyze historical data and make data-based predictions of future trends to make more informed decisions about when to buy, what to buy, and how to negotiate better deals.
5. Focus on Total Cost of Ownership (TCO)
Instead of just looking at the sticker price, consider the total cost of ownership when evaluating suppliers. This includes factors like maintenance, shipping, and potential downtime. A cheaper upfront cost may not be the best deal in the long run if hidden costs add up.
6. Stay Informed About Market Trends
Keep an eye on market trends and economic indicators. Understanding what drives prices in your industry can help you anticipate changes and adjust your strategies accordingly. This proactive approach allows you to stay a step ahead of inflationary pressures and shield your procurement strategy from sudden market shocks.
Key Metrics to Consider:
- Consumer Price Index (CPI): This is the most widely used measure of inflation, tracking changes in prices paid by urban consumers for a basket of goods and services.
- Core Inflation: Excluding volatile food and energy prices, this measure provides a clearer picture of underlying price trends.
7. Invest in Supplier Relationships
Building strong relationships with suppliers can pay off in times of crisis. Good rapport can lead to better communication and more favorable terms. When suppliers see you as a valuable partner, they may be more willing to make a deal during tough times.
8. Educate Your Team
Ensure that your procurement team is well-educated about the current economic landscape and inflation trends. The more informed they are, the better equipped they’ll be to make the right decisions.
A Proven Strategy That Saves Money, Time, and Effort
Looking for a smart way to tackle rising costs? Group Purchasing Organizations (GPOs) like Una pool the buying power of our members to snag serious discounts from top suppliers. By negotiating contracts based on a huge network of members, GPOs can score savings that most individual companies would struggle to achieve on their own; sometimes up to a whopping 80% on indirect products and services.
So, how does this help businesses dealing with rising costs and persistent inflation? Well, on average, being part of Una’s membership base means you can inject an extra 18-22% back into your budget. That’s a solid cushion against operational expenses that keep creeping up.
But it’s not just about the cash saved. Joining a GPO also simplifies the whole procurement process. GPOs like Una do the hard work for you, saving you weeks of research time that you’d otherwise spend on RFX, trying to find the best suppliers, and conducting lengthy negotiations. Instead, our members gain instant access to over 2,500 pre-negotiated contracts that save.
Una: Your Partner in Cost Reduction
In today’s unpredictable economy, it’s no wonder many organizations are hesitant to dive into new programs, especially with worries about extra costs. But here’s the good news: joining Una, a Group Purchasing Organization (GPO), won’t cost you a dime! Una is funded by suppliers, so you don’t have to worry about adding any financial burden to your organization.
What’s even better? Una is like having a personal advisor for your business. We offer tailored solutions to meet your procurement needs, plus handy tools like cost comparison analyses and supply chain management support that are super useful when inflation starts to bite.
And don’t worry, Una isn’t here to replace your procurement team. Think of us as an extension of your crew, helping you quickly tap into savings on indirect spending and save your bottom line.
You don’t have to navigate these economic challenges on your own. Una’s sourcing advisors are ready to help you find savings opportunities, so you can tackle inflation head-on and keep your organization thriving.
Contact our team to learn more.
