Inflation: Procurement's Time to Shine
September 29, 2026
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Procurement's Time to Shine
What the latest inflation figures actually mean.
Welcome to edition #33 of The Sidekick!
Procurement teams perform best when they’re standing on a burning platform. The current environment, with inflation stubbornly above 3% and two of the world's most critical maritime chokepoints under simultaneous pressure, is exactly the kind of moment the function was built for.
This issue is about what it looks like when procurement starts being the most consequential team in the building.
We cover what the latest inflation figures actually mean for category managers, why the Houthi threat to Red Sea shipping is not Saudi Arabia's problem to solve, and how organizations with strong sourcing disciplines are using this period of disruption to prove value in ways that outlast the crisis itself.
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Let's get into Issue #033...
The Supplier Relationship Management Playbook for GPO Members
How to build stronger supplier relationships and get even more value from your GPO membership.
Inflation: Procurement's Time to Shine
What the latest inflation numbers mean for category managers.
U.S. inflation came in at 3.4% for the twelve months ending August 2026, and on September 16 the Federal Reserve responded by raising its benchmark interest rate by 25 basis points to a target range of 3.75% to 4%, the first rate hike since 2023. The vote was unanimous. Chairman Kevin Warsh said inflation had been "too high for too long" and that the standard for confidence in a return to price stability had not been met.
Markets are now pricing in at least one further hike before year end, with the Fed's own charts pointing to a year-end rate of around 4.1%.
The composition of that 3.4% headline number matters as much as the figure itself. Gasoline is up 27.4% year-on-year and fuel oil up 52%, both direct legacies of the Iran energy shock that pushed the headline rate to 4.2% in May.
Those pressures have partially eased, pulling the headline back from its peak. Core CPI, which strips out food and energy, sits at 2.4%, its lowest reading since March 2021. But Warsh made clear that too many categories are still running above 3% on both six-month and twelve-month measures, and that core PCE, the Fed's preferred gauge, is running closer to 3.2%.
The rate hike reflects a judgment that the broader inflation picture has not improved enough, and that a strong labor market and resilient growth give the Fed room to act.
For procurement teams, the rate hike adds a headache that goes beyond the cost of goods. Borrowing costs are rising, capital expenditure decisions are getting harder to approve, and CFOs under margin pressure will be looking harder at operating expenditure in every category.
That is not a bad environment for a function that exists to find savings. It is, in fact, the burning platform that procurement performs best on. When inflation is persistent, visible, and affecting every line on the P&L, the sourcing function becomes the most relevant team in the building.
Organizations managing fleet, logistics, utilities, and energy spend are still absorbing significant real-dollar pain. Teams focused on professional services, technology, and general indirect spend are operating in a considerably more manageable environment. Treating all of your spend as equally exposed to inflation produces average analysis and average outcomes.
Proving Procurement's Value
Here are six ways to prove procurement’s value in an inflationary environment.
- Map your inflation exposure by category before anything else. Energy-linked categories need a fundamentally different response than categories running at or below core CPI, and grouping them together obscures where the real action is.
- Accelerate any contract renegotiations sitting in the pipeline. Suppliers facing their own cost pressures will push increases through at renewal. Getting ahead of renewal dates, even by one quarter, materially changes your negotiating position.
- Build escalation and de-escalation clauses into new agreements. Contracts signed in a 3.4% environment should not lock in pricing as though inflation will stay there indefinitely, in either direction.
- Increase visibility across tier-two spend. Inflation in indirect categories, particularly energy, logistics, and packaging, has a way of arriving disguised inside supplier price increase requests attributed to labor or materials. Actual cost-build transparency is the mechanism that separates a justified increase from an opportunistic one.
- Run a proper indirect spend audit. Search for billing errors, unclaimed rebates, redundant contracts, and auto-renewals that slipped through during leaner oversight periods. That kind of leakage is always present, but inflation makes it expensive.
- Leverage a GPO. Una's pre-negotiated supplier agreements give member organizations access to pricing benchmarks and contract terms that most mid-market procurement teams could not replicate independently. In a sustained inflation environment, the gap between market pricing and GPO pricing widens.
The Houthis: Not Just Saudi Arabia's Problem
What can procurement do?
On August 12, Houthi rebels fired three ballistic missiles at the Egyptian-owned cargo vessel Tihamah as it transited the Bab el-Mandeb strait at the southern end of the Red Sea, killing six people including rescuers who arrived after the first strike.
The Houthis had already declared a naval blockade of Saudi Arabia in the Red Sea the month before. Throughput at Bab el-Mandeb (evocatively named “The Gate of Tears”) had halved before the attack. Now it is worse.
In much of the U.S. political conversation, the Houthis are framed as a regional actor with a regional grievance: Yemen's civil war, Saudi Arabia's involvement in it, and the broader Iran-linked militia network.
The implied conclusion is that stabilizing the Red Sea is Riyadh's problem to solve, but procurement teams managing international supply chains understand why that framing is wrong.
The Red Sea and the Suez Canal together handle somewhere between 12 and 15 percent of all global seaborne trade. Before the Houthi campaign began in late 2023, roughly 25,000 merchant ships passed through annually. That number had already dropped to around 10,000 before August's escalation.
The detour around the Cape of Good Hope adds approximately ten days to a voyage and around a million dollars in additional fuel costs per trip. Effective shipping capacity shrinks, rates go up, and those costs land on buyers.
With the Strait of Hormuz simultaneously constrained by the U.S.-Iran conflict, which reduced throughput from a prewar average of more than 130 vessels per day to just six on some days in August, the world is now looking at two of its most critical maritime chokepoints under pressure at the same time.
Analysts estimate roughly a quarter of global oil supply faces active exposure across both corridors.
What Can Procurement Do?
The impact for procurement is visible in freight rate data from this past quarter, in fuel surcharges, and in lead time extensions across Asian-sourced categories. The Houthis are a structural constraint on global logistics, and the instinct to treat them as someone else's diplomatic problem leaves supply chains exposed.
What can procurement do?
- Treat Red Sea instability as a planning constant rather than a temporary disruption.
- Build Cape of Good Hope transit times into lead time assumptions for any Asia-to-Europe or Asia-to-US-East-Coast sourcing.
- Negotiate freight contracts that include routing flexibility clauses rather than fixing rates against a specific corridor.
- Watch the Bab el-Mandeb throughput data as a leading indicator of rate movements, because it moves before the rate indices do.
📰 In Other News...
Keeping a pulse on the industry.
U.S. - China Trade Truce Extended
The U.S. and China have agreed to extend their current trade truce by two months, pushing the deadline to January 10, 2027. The extension keeps existing tariff reductions and other paused trade actions in place while negotiations continue.
For procurement teams, the extension offers a little more breathing room, but uncertainty remains. Businesses with China exposure should continue watching tariff negotiations, critical mineral restrictions, and other trade measures that could affect sourcing and costs in the new year.
Tracking the Latest U.S. Tariffs
U.S. tariff policy continues to shift, with new duties, trade investigations, negotiations, and proposed tariffs affecting a wide range of countries and products. A recent Supreme Court ruling struck down tariffs imposed under emergency-powers law, but the administration continues to pursue tariffs through other authorities, including Sections 232 and 301.
For procurement teams, the changing landscape makes it important to keep a close eye on supplier exposure, landed costs, and sourcing plans. This continuously updated tracker provides a useful snapshot of which tariffs are currently in force, under investigation, being negotiated, or still proposed.
🤖 AI Procurement News
Artificial intelligence shaping the industry.
Salesforce envisions AI running end-to-end RFP.
The company's AgentExchange SVP described a near-term scenario where an AI agent runs the full RFP process end to end, writes the brief, distributes it to vendors, scores the responses, and completes the purchase on a corporate credit card within a set budget.
Companies choosing AI agents by ease-of-approval rather than performance.
A report by the Actuaries Institute warns that “companies adopting agentic AI may prioritize tools that are easier to approve through cybersecurity and procurement processes over more capable alternatives.”
xAI turned an AI agent loose on its own procurement.
Haggle Bot, built on Grok, found more than $100,000 in savings by auditing unused SaaS seats, cutting redundant software SKUs, and shopping weekly office supply orders across Amazon, Costco, Uline, and Walmart before drafting negotiation emails to incumbent suppliers with same-day competitor pricing attached. The full system prompt is published in the article and is worth reading for any team thinking about what an agentic procurement brief looks like in practice.
💫 Resources from Una
- Guide: The CFO's Guide to a GPO Partnership
- Playbook: The Supplier Relationship Management Playbook for GPO Members
- Article: It’s Budget Season! Why Does Procurement Get Left Out of the Conversation?
- Article: The Compliance Case For Joining a GPO
- Article: What is a Preferred Supplier List and Why Do So Many Go Stale?
- Article: Rebuilding (and Rebranding) Supplier Diversity for Long-Term Impact
- Article: Isn’t ALL Procurement Strategic?
- Podcast: Episode 245 Featuring Richard Campbell
- Podcast: Episode 246 Featuring Mike Fedorov
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