Category Management Outlook for 2025: Key Insights & Spend Strategies

As we dive into 2025, procurement and supply chain leaders must navigate a rapidly evolving landscape shaped by economic stabilization, technological breakthroughs, and rising sustainability demands. 

The GEP Spend Category Outlook 2025 provides actionable insights into these trends, helping organizations prepare for the opportunities and challenges that lie ahead. 

This comprehensive report not only highlights the forces reshaping direct and indirect spend categories but also offers strategies to foster resilience and growth in a complex global environment. 

Understanding the Economic Landscape 

Economic conditions are set to stabilize as global inflation is projected to decline significantly, from 6.8% in 2023 to 3.5% by 2025. This positive shift, supported by steady GDP growth of 3.2% and easing unemployment rates, signals a more favorable environment for procurement activities. Declining interest rates are further bolstering investment opportunities, encouraging businesses to explore growth-oriented strategies. 

Yet, despite these promising indicators, challenges persist. Geopolitical tensions, raw material shortages, and fluctuating energy prices remain significant concerns, demanding that procurement leaders adopt strategies that balance opportunity with risk and resilience. 

The Transformative Power of Technology 

Technology continues to be a cornerstone of procurement innovation, fundamentally reshaping how businesses operate. AI and automation are enabling real-time analytics, improving decision-making processes, and streamlining supply chain operations. These advancements empower procurement teams to stay agile and responsive in an increasingly dynamic environment. 

Flexible financing models, such as leasing and Equipment-as-a-Service (EaaS), are gaining traction. These approaches help reduce capital risks while offering greater adaptability to shifting market conditions. At the same time, sustainability considerations are becoming central to procurement strategies , with organizations prioritizing eco-friendly materials and aligning with ESG goals to meet both regulatory and stakeholder expectations. 

Indirect Spend: Adapting to Disruption and Sustainability Demands 

Indirect spend categories are undergoing a significant transformation, driven by disruptions and evolving sustainability demands. 

Logistics, a cornerstone of indirect spending, faces persistent challenges. Labor shortages, rising fuel costs, and regulatory pressures continue to affect inland logistics, while in North America, nearshoring and e-commerce growth are driving demand. Meanwhile, Europe faces the dual pressures of rising costs and stringent emissions regulations. 

In ocean freight, geopolitical disruptions and capacity constraints underscore the importance of strategies such as index-linked contracts and regional vendor diversification. Warehousing is also evolving, with a growing emphasis on cold storage and smart technologies to meet the demands of e-commerce.

Corporate travel, too, is experiencing a resurgence, with hybrid event models and digital corporate solutions reshaping the landscape. Sustainability has become a key focus, prompting investments in eco-friendly air travel and electric vehicle fleets. Hotels and travel management companies are responding with flexible booking options and enhanced sustainability credentials to meet the changing needs of businesses. 

Human resources spending is adapting to a diverse and evolving workforce. Procurement teams are increasingly focused on delivering personalized employee benefits, including AI-powered wellness programs and telemedicine services. The rise of the gig economy and an emphasis on diversity, equity, and inclusion (DEI) are also reshaping hiring practices and labor strategies. 

Direct Spend: Managing Price Volatility and Clean Energy Transition 

Direct spend categories, encompassing raw materials and production inputs, are equally dynamic. Renewable energy sources such as solar, wind, and green hydrogen are gaining prominence. However, disruptions in the supply of critical materials like lithium and nickel continue to challenge the transition to clean energy solutions. In response, organizations are turning to strategic inventory planning and investments in resilient supply chains. 

The metals and chemicals sectors are also experiencing volatility, driven by geopolitical uncertainty. Long-term contracts and regional sourcing are increasingly prioritized to stabilize supply and costs. Meanwhile, sustainability is becoming a driving force, with bio-based chemicals gaining traction as organizations seek eco-friendly alternatives. 

Agricultural commodities remain subject to significant food inflation, especially in emerging markets, pushing procurement teams to adopt advanced forecasting tools and forge partnerships with sustainable farming operations. Packaging trends are also shifting, with a growing emphasis on biodegradable and recyclable materials in response to consumer demand and regulatory pressures. 

Strategic Recommendations for 2025: AI and Stronger Supplier Ties 

Success in 2025 will require procurement leaders to adopt a multi-dimensional approach to strategy. 

Technology will play a central role, with AI-driven insights and predictive tools enabling more efficient operations. At the same time, sustainability must be embedded in procurement strategies to align with regulatory requirements and evolving consumer expectations. 

Building stronger supplier relationships will be essential, particularly through diversifying sourcing strategies and collaborating with regional vendors. These efforts will mitigate risks and foster greater supply chain resilience. Flexible financing models will also help organizations adapt to market shifts while minimizing upfront investments. 

As global markets stabilize, the opportunities for procurement professionals to create strategic value are unprecedented. By embracing technology, prioritizing sustainability, and fostering collaboration, organizations can transform challenges into growth opportunities. 

Read the GEP Spend Category Outlook 2025 now