SKILLSOOP April 2025 Market Snapshot

Australia Economy

  • As predicted in March, consumers are saving as economic sentiment worsens, reducing consumption in wider economy.
  • Consumer credit continues to increase as households struggle to make ends meet.
  • Retail sales YoY in decline as consumer tighten belts to meet harder times.
  • PMI hits 52.6 which is the strongest growth since Oct 2022. Supply shortages still a factor re shipping delays.
  • New Orders increased due to perceived improvement in economy, increases in chemical exports and government stimulus re green industrial sectors
  • Australian Imports represented in March are results of Jan 2025, demonstrating a decline of 0.3%. Predictions are further declines as consumers tighten.
  • Yields are rising on the 10 Year Treasury indicating a lack of confidence in government as debt continues to rise and the economy continues to flounder.
  • Government spending continues to rise as the Albanese government channels debt to pay off energy rebates, student debt and increase funding to public schools.
  • Australian government borrowed $5billion over forecast, leveraging $100billion in newly issued bonds to fund cost of living crisis. This is predicted to climb to $150billion next year.

German Economy

Germany ranks as the world’s third-largest economy, yet it has faced significant challenges in recent years. The industrial sector has been steadily contracting
since 2018, and business performance is being negatively impacted by reduced demand for goods, a direct consequence of the strained global economy. The
automotive and engineering sectors are particularly vulnerable, with demand for German products in China and other Asian markets declining due to
weakened economic conditions in the region.
A key challenge lies in insufficient investment, particularly in education and infrastructure, areas that have been historically underfunded. Additionally,
excessive government regulation has compounded these issues, while energy policies have driven up operational costs and affected consumption patterns.
Germany’s GDP has contracted in recent years, leading to significant job losses across its manufacturing sector, which has traditionally been the backbone of
its economy.
The country’s heavy reliance on energy, especially natural gas, has been problematic, as skyrocketing energy prices and rising labour costs have placed further
strain on businesses. Moreover, Germany’s dependency on energy imports to support its export-driven economy exposes it to global macroeconomic risks,
threatening its ability to achieve sustained GDP growth. Investment has also been hindered by policies implemented by previous administrations.
For example, Angela Merkel’s Debt Brake, introduced in 2009, imposed a limit on government borrowing, restricting Germany’s fiscal flexibility. This has
impeded the government’s ability to fund costly initiatives such as infrastructure development and advancements in AI, creating a negative cycle as economic
contraction results in reduced investment, further hindering growth. The newly elected government faces the urgent task of reversing these trends. A major
investment plan, totalling $1 trillion, has been introduced to stimulate the economy, focusing on infrastructure and defence. However, this increase in debt is
expected to raise interest rates, placing additional pressure on future generations. To offset this spending, the government will need to reduce expenditure in
other areas, such as public wages and social security. Furthermore, increasing labour availability and boosting productivity will be essential to drive higher tax
revenues while also reducing income tax rates. Balancing these economic challenges will be difficult, as policies aimed at increasing immigration could further
exacerbate inflation, potentially inflating both corporate profits and wages

UK Economy

The Bank of England has significantly revised its growth forecast, halving expectations, and the January 2025 figures indicate a contraction in GDP.
Over the past decade, the UK has made limited progress, with its growth rate slowing from an average of 3% annually between 1993 and 2007 to just
1.5% between 2009 and 2023. Although no official tariffs have been introduced as of now, global tariff pressures are impacting the UK economy.
Business confidence is notably low, and economic sentiment plays a critical role in driving economic outcomes; just as depression can trigger physical
illness, low confidence can potentially spark a recession. Stagflation presents an additional threat, with the combination of low growth and rising prices
looming on the horizon.
The Bank of England has forecast inflation to remain above 2%, potentially rising to 3.5% by the end of the year. Persistent high inflation is likely to lead
to higher interest rates, which would result in reduced investment from both public and private sectors. Under the current political leadership, the UK is
simply not an attractive destination for investment. A fundamental issue for the UK economy is its stagnating productivity growth, which remains very
low. Increasing productivity is crucial to improving the debt-to-GDP ratio, and productivity is closely tied to investment levels. As the US makes its
investment environment more attractive, capital is increasingly fleeing the UK, with Australia and Canada also seeing similar trends. US companies are
bringing capital back home, while in the UK, many billionaires and businesses are relocating, and over 200,000 businesses have closed since Sir Keir
Starmer assumed office.
The UK’s aggressive tax policies are pushing wealth away rather than fostering growth. The government appears to misunderstand the principle of
expanding the economic pie and taking a smaller but more valuable share, instead opting to shrink the pie and take a larger portion. Another significant
issue is the size of the UK government, which, much like in Australia, is stifling genuine economic growth. Despite the expansion of government, there
has been little improvement in public amenities, safety, or overall infrastructure. This discrepancy raises concerns about the efficacy of government
spending. It may be worth considering following the US model and implementing a DOGE program, allowing the public greater transparency and
insight into how taxes are being utilized.

US & China (Tariffs & Control of Global Trade)

The tariff conflict has intensified as China has imposed import taxes on a range of U.S. goods, including coal, oil, utility trucks, and agricultural products,
with tariffs ranging from 10% to 15%. Additionally, China has added 15 U.S. companies to its export control list, prohibiting Chinese firms from selling
dual-use technologies to American businesses. These measures follow the U.S.’s imposition of 20% tariffs on Chinese imports. In response, China is
likely to strengthen its domestic supply chain efficiency and promote domestic consumption, as rising import costs and declining consumer wealth
create a strong impetus for shifting toward locally produced goods.
However, China is not the only country facing U.S. tariffs. Mexico, Canada, and Australia have also been targeted to ensure fair trade conditions for the
U.S. This has led to Canada threatening to limit U.S. energy supplies, with anticipation surrounding the response from Australian Prime Minister
Albanese. The U.S. appears to be adopting a nationalist stance, possibly even contemplating a withdrawal from NATO, yet it still insists on the U.S.
dollar remaining the global reserve currency. This is evident in its threat to the BRICS nations of imposing a 100% tariff on international trade if they
abandon the U.S. dollar. It appears that former President Trump is seeking to pivot away from the current global order but on terms favourable to the
U.S.
To nationalize the economy and position the U.S. as a creditor nation that manufactures and exports goods, the U.S. dollar cannot remain the global
reserve. However, as China aggressively buys gold and reduces its holdings of U.S. debt, the U.S. recognizes that this transition will require a gradual
devaluation of the dollar. The BRICS nations, along with China, are accelerating this process, potentially putting the U.S. at a disadvantage. While the
U.S. is determined to fight this transition; it has already imposed penalties on countries seeking energy from Venezuela and may look to weaponize the
Panama Canal, which has recently been acquired by BlackRock from Chinese interests.

Should the BRICS nations succeed in avoiding the U.S. dollar, both the U.S. and BRICS countries will face significant economic challenges. However,
the key question is which side will emerge stronger. Recently, China added 250 tons of gold to its reserves, signalling its intent to move away from the
U.S. dollar in favour of gold for international transactions. This would reduce the U.S.’s ability to impose economic sanctions. With diminished global
demand for U.S. debt, the U.S. will likely experience higher borrowing costs as its debt loses its status as a Tier 1 asset.
The U.S. is approaching the end of its current financial cycle and can no longer afford to rely on the accumulation of future liabilities, which have been
rolled over for the past 30 years. The cost of lending is now surpassing the defence budget, putting domestic security at risk. The impact of tariffs will be
severe on global supply chains. Production costs will rise, and margin compression will be inevitable across all sectors of cost of goods sold (COGS).
Companies will struggle to pass these costs onto consumers without risking a significant loss in market share, particularly in highly price-sensitive
markets. This will open the door for domestic competitors, cheaper alternatives, or product avoidance. The counterbalance to this will come from
reductions in operating expenses and investment, which will stifle innovation and slow economic advancement, ultimately leading to higher
unemployment rates. This will put pressure on businesses, reducing top-line revenue and squeezing margins, while straining government social
programs.
A prominent example of how tariffs are impacting businesses is Tesla. The company has lost 50% of its market value, with $800 million in market cap
evaporating, after its stock dropped 15% in a single day. This decline is partly due to Elon Musk’s political views, along with Chinese consumers’
growing preference for cheaper domestic alternatives as economic pressures mount and household wealth diminishes. Additionally, China has raised
taxes on Tesla from 15% to 25%, further impacting the company’s operations in the Chinese market, where its global market share has now fallen to
54%. Tesla will face significant challenges in improving both its pricing and technology to retain market share as demand weakens and market value
declines.
Another example is Walmart, which imports a substantial amount of merchandise from China. The company will now struggle to absorb the cost
increases without passing them onto customers, potentially leading to higher prices for consumers and putting pressure on Walmart’s business model.

Procurement Market Trends

The procurement market is currently experiencing a downturn as businesses struggle to manage the impact of rising costs, shrinking margins, and
declining revenues. While some procurement recruiters and professionals suggest this challenging environment presents an opportunity for
procurement to thrive, the increase in both the number of available and active procurement professionals indicates otherwise. A significant portion of
redundancies, both happening and anticipated, are occurring within large-scale operations with established procurement infrastructures, where
procurement teams exceed 50 FTEs.
As CFOs assess strategies to protect P&L statements, shared services—including procurement—are undergoing increased scrutiny. The primary
catalyst for change is the CFO’s shifting perspective on value. The concept of total cost of ownership, which served well in times of growth and low
interest rates, is now being replaced by more rapid and agile cost-reduction initiatives aimed at optimizing operational cash flows. With rising costs and
falling revenues, many organizations are scaling back on contract management (SRM) and enablement resources, focusing instead on sourcing projects
that can improve cash flow in the short term. Many candidates entering the market possess expertise in these areas, with trends emerging in retail,
services, finance, and government sectors.
As the supply of procurement professionals increases, wages are softening due to the imbalance between supply and demand. However, this correction
in procurement salaries is countered by the persistent rise in the cost of living, which shows no signs of slowing. In these challenging times,
procurement professionals will need to demonstrate immediate value, particularly in cost reduction, to CFOs and other senior stakeholders. This
requires the ability to evaluate and deliver deals quickly while balancing long-term goals, such as total cost of ownership (TCO). For those in
procurement who seek to drive value beyond just savings, this shift could prove frustrating, as many deals may not fully capture the broader spectrum
of value, including risk and quality considerations.
A notable trend in the market is the growing disconnect between procurement and business stakeholders, resulting in delays and unrealized value in
procurement projects. Category managers often struggle to engage key stakeholders, needing to actively “wrestle” for critical information to inform
evaluations and planning. This issue is often attributed to a lack of investment in, or adoption of, technology—though insufficient investment is the
most cited factor. As technology continues to evolve, communication remains a critical challenge for all corporate roles, particularly in procurement,
which relies heavily on relationships, data, and contracts. From managing downstream procurement teams to collaborating with cross-functional teams
and engaging suppliers, poor communication is leading to frustration, inefficiencies, and additional operational costs. Given these challenges, the
immediate priority for executives across shared services, including procurement, is job retention. Once the economy stabilizes, career progression will
once again take precedence.

Navigating Economic Uncertainty: Strategic Cost Management and Workforce Adaptation

As global economic conditions continue to deteriorate, the United States is leveraging its consumer market to recalibrate trade dynamics, intensifying supply chain pressures on businesses. A primary challenge in this environment is cost management—maintaining supplier relationships while facing contracting revenue streams. Organizations must confront a critical dilemma: how to invest in future growth while employees fear job losses and boards anticipate increasing revenue declines. Recapitalization remains expensive, and cash reserves are rapidly depleting.

At SKILLSOOP, we have observed a growing trend of businesses reducing costs by downsizing roles within shared service functions, including procurement. This shift has been a significant shock to many professionals we engage with, as they report being fully utilized with a strong pipeline of opportunities to deliver value. However, while workforce reductions may temporarily improve cash flow, indiscriminate cost-cutting can have long-term repercussions. Although reducing headcount may enhance net asset value and return on capital employed (ROCE) in the short term, it risks undermining overall business performance, particularly in channel strategies. Poorly executed cost-reduction initiatives can lead to declining share prices and diminished book value over time.

In April, SKILLSOOP emphasized the need for organizations to rethink their approach. Adjusting profit and loss (P&L) levers alone may no longer be sufficient to correct underperformance, and businesses face the real danger of falling into a self-destructive cycle. Capital restructuring, without a well-defined strategic course of action, is unlikely to drive sustainable improvements. Success in these conditions requires decisive action—not only identifying key business challenges but also implementing tangible, strategic solutions. Organizations must move beyond aspirational mission statements and theoretical objectives, which offer little value when fiscal momentum has stalled. The ability to pivot and take bold, informed action will distinguish resilient companies from those that struggle to survive.

This period of transformation extends beyond businesses—procurement professionals must also reassess their core competencies to remain relevant in the evolving economic landscape. The shifting policy environment demands a recalibration of skills to align with new economic and regulatory realities. For example, the recent dismantling of multiple U.S. government departments under the Department of Government Efficiency (DOGE)—including the Department of Education—signals a broader trend of fiscal realignment. Regardless of individual perspectives on these policy changes, such measures will inevitably influence global markets. Reduced government spending and resource reallocation will drive efficiencies in tax and debt revenues, necessitating a transition from consumption-driven GDP metrics to investment- and productivity-focused private sector activities.

Moreover, evolving trade policies, including the review of U.S. tariffs on Australian steel and aluminium imports and potential corporate tax reforms, will reshape global market dynamics. These shifts necessitate proactive strategies from both procurement professionals and business leaders.

In an era of economic volatility, adaptability, strategic foresight, and decisive action will be the defining factors of success. The future belongs to those who can navigate uncertainty with resilience and a clear vision for growth.

The Future of Procurement: Strategic Evolution in the AI Era

A critical question emerges as we look ahead: What will businesses expect from procurement over the next decade, and how well do today’s procurement professionals align with those expectations? While predicting the future with absolute certainty is impossible, one undeniable reality is that artificial intelligence (AI) will fundamentally reshape procurement. AI is projected to automate at least 50% of procurement’s administrative and analytical functions, resulting in reduced employment, lower costs, decreased risk, and enhanced productivity. This transformation will inevitably reduce procurement headcounts, affecting the broader shared services sector and introducing economic challenges.

Given this shift, it is essential to examine which skills remain underdeveloped within the profession and how AI-driven efficiencies can enable procurement professionals to add greater strategic value. Historically, procurement has been viewed as a tactical function, often consumed by transactional purchasing tasks and contract renewals in under-resourced departments. Conversely, some organizations have over-invested in headcount while under-investing in process sophistication, leading to inflated budgets and suboptimal outcomes.

As a result, procurement professionals in the market tend to fall into three broad categories:

  1. Strategically Capable but Resource-Constrained (Group A): These professionals possess strategic procurement knowledge but lack the necessary time, support, or resources to execute effectively.
  2. Tactical Professionals Who Perceive Themselves as Strategic (Group B): These individuals believe they operate strategically but lack the depth, framework, or experience to deliver genuine strategic value.
  3. Genuinely Strategic and Empowered (Group C): A small subset of professionals who have deep expertise in procurement strategy and operate within organizations that enable them to execute at a high level.

For professionals in Groups A and B, the job market is set to become increasingly competitive. Both groups will contend for a shrinking pool of opportunities. Those in Group A—who often express frustration over their lack of strategic engagement—may be perceived as retention risks, while Group B may struggle to demonstrate tangible value. Many organizations speak of transformation but lack a true commitment to meaningful change, creating a challenge for professionals attempting to differentiate themselves. Both groups risk being constrained by businesses that aspire to be strategic but fail to provide the necessary infrastructure and leadership to support such ambitions.

Meanwhile, Group C represents only 10% of the market—professionals who not only understand procurement at a strategic level but have also been empowered by their organizations to implement their expertise effectively. These individuals often face difficulties in securing roles that match their level of sophistication. Many must consider trade-offs, such as accepting a pay cut for a more challenging role or relocating internationally.

This transition coincides with a broader global trend—governments shrinking in response to economic pressures. Countries such as Argentina have led the way in downsizing public sectors, a strategy now mirrored by the United States. This shift will exacerbate labor market challenges, as displaced procurement and shared services professionals will compete with public sector employees navigating the realities of the Fourth Industrial Revolution. Just as interest rates declined for half a century before a sharp correction, the long-standing trend of government expansion and industrial sector contraction in developed economies is reversing. However, as with financial markets, this correction will be disruptive and complex.

With AI projected to eliminate 50% of procurement’s tactical workload, demand for true strategic capability will increase significantly. Procurement professionals will face a stark choice: upskill or risk obsolescence. The next decade will belong to those who can transcend traditional procurement roles and embrace a strategic, value-driven approach.

The Importance of Technical Procurement Skills

At SKILLSOOP, we emphasize the critical importance of technical procurement expertise, actively assessing these competencies as part of our framework. In this context, “technical” refers to academic proficiency—candidates’ ability to interpret data and provide definitive insights, independent of broader business integration complexities. Our market analysis, presented in the graph on page 19, reveals substantial room for improvement across key procurement competencies.

Among the assessed capabilities, external analysis ranks highest, followed by internal analysis and risk management. However, financial aptitude, cost management, and negotiation preparation score the lowest. These findings raise several important questions:

  • How effectively is data being utilized to drive meaningful procurement outcomes?
  • If cost and risk reductions are being achieved within third-party networks, how are they being measured and sustained?
  • Who ultimately makes the most impactful procurement decisions—the P&L holder or procurement itself?
  • To what extent does procurement methodology directly influence business performance?
  •  

While rigid tender frameworks with strict pricing stances may be sufficient for short-term cost reduction, their long-term viability remains uncertain—particularly as AI-driven automation advances.

Key Technical Procurement Skills

The following core competencies will be essential for procurement professionals to remain competitive in an AI-driven landscape:

  1. Cost Management: Analysing key financial metrics to inform strategic supplier negotiations, demand management, and cost-reduction initiatives.
  2. Internal Analysis: Leveraging data-driven insights to identify opportunities, mitigate risks, and drive continuous improvement within supply chains.
  3. External Analysis: Assessing market trends, economic indicators, and geopolitical factors to optimize procurement strategies and create long-term value.
  4. Supplier Evaluation: Conducting in-depth technical and commercial assessments to enhance sourcing, supplier development, and risk mitigation.
  5. Third-Party Risk Management: Strengthening supply chain transparency and resilience in response to shifting global market conditions.
  6. Negotiation Preparation: Aligning procurement strategies with external market forces, industry trends, and corporate objectives to maximize shareholder value.
  7. Financial Aptitude: Interpreting financial data to support commercial decision-making and the development of robust procurement models.
  8. Supply Chain Fulfillment: Implementing best-in-class strategies to optimize performance, mitigate risks, and drive revenue growth.

The Path Forward

Procurement is at a crossroads. As AI reshapes the function, professionals must evolve beyond tactical execution to demonstrate strategic acumen. The ability to leverage data, manage risk, and drive commercial value will define success in the coming decade. At SKILLSOOP, we remain committed to equipping professionals with the tools and insights necessary to navigate this transformation. The future of procurement will not be determined by those who simply react to change—it will be shaped by those who anticipate it and take decisive action.

Procurement Strategy: Bridging the Gap Between Tactical Execution and Business Impact

A critical observation in procurement is that strategies often succeed in isolation—such as cost reduction initiatives—yet, when assessed within the broader business context, they can inadvertently increase risk exposure, impact revenues, and erode customer retention. Despite widespread discussions on procurement’s potential to drive business performance, many professionals struggle to link leading economic indicators to future risks. However, this challenge extends beyond economic literacy; it is fundamentally an issue of strategic comprehension.

Supply Chain Operational Execution

To excel in procurement and supply chain management, professionals must demonstrate expertise across multiple competencies:

  • Risk Management – Assessing and mitigating supply chain risks within complex ecosystems by analysing economic, financial, commercial, and reputational factors.
  • Channel Management – Evaluating sector, market, and customer dynamics to optimize product demand, enhance revenue generation, and mitigate supply chain disruptions.
  • Supplier Evaluation – Conducting in-depth risk assessments, considering supplier insolvency risks, mergers and acquisitions, intellectual property (IP) concerns, supply disruptions, sector trends, and competitive positioning.
  • Market Evaluation – Analysing external trends and macroeconomic forces that influence business performance, capital structures, competitive landscapes, and corporate reputation.
  • Procurement Execution – Aligning procurement activities with gross margins, operational expenditures (OPEX), supply risks, and revenue impact to ensure strategic coherence.
  • Cost Control – Implementing robust cost management strategies that account for supply chain risks, IP considerations, demand fluctuations, and market-specific variables.
  • Revenue Support – Identifying and mitigating revenue risks linked to current and future sales, ensuring that commercially viable supply chain strategies optimize costs while sustaining profitability.

By mastering these competencies, procurement leaders can elevate their strategic value, driving sustainable business performance beyond traditional cost-saving measures.

The Misconception of Strategy

Throughout my career, I have consistently asked candidates to define strategy—a question I have posed for over 20 years. The most common response is “goal setting,” with many professionals equating strategy to identifying a target and formulating a plan to achieve it. This perspective frequently leads to examples of so-called “strategic achievements,” such as relocating a manufacturing plant or adopting a new procurement model. While these initiatives can be components of a strategy, they are not inherently strategic; rather, they are tactical business plans executed in service of a broader agenda.

A true strategy is a response to a core business challenge, and its success depends on accurately identifying the underlying issue a company faces. SKILLSOOP assessments consistently reveal that the most significant gap in procurement capability is the inability to diagnose the real business problem. (Refer to Graph on Page 23.) Once the root challenge is correctly identified, strategy formulation and execution improve dramatically.

Strategy begins with a deep understanding of the business environment—interpreting information accurately and then aligning coordinated actions, policies, and resources to implement a meaningful solution. The most complex aspect of strategy is interpretation, as new strategies often emerge from revised perspectives on existing data.

The Contradictions in Procurement Strategy

A recurring pattern in SKILLSOOP’s strategy assessments is that most procurement strategies focus on revenue growth rather than risk mitigation or cost reduction. Others attempt to address multiple objectives simultaneously, leading to contradictory initiatives that erode value. When procurement strategies are misaligned with core business issues, conflicts emerge between policy and execution—ultimately increasing costs, amplifying risks, and undermining long-term revenue potential, despite intentions to optimize them.

Fundamentally, procurement does not need to be deeply embedded in broader corporate strategy. Its primary role is to ensure effective procurement modelling that aligns with branding, internal politics, and financial structures to enhance efficiency and cost control. For most procurement professionals, mastering category strategy planning is sufficient for achieving optimal performance within a procurement function.

However, for those in senior leadership roles—General Managers (GMs), Chief Procurement Officers (CPOs), or Portfolio Managers—who aspire to executive positions beyond procurement, enhancing strategic competencies becomes essential. The ability to integrate procurement with corporate strategy, risk management, and revenue optimization can significantly strengthen a leader’s credibility, influence stakeholders, and create pathways to board-level impact.

In the evolving landscape of procurement, professionals who cultivate a comprehensive strategic skill set will distinguish themselves as industry leaders—capable not only of optimizing procurement functions but also of shaping broader business success.