How Procurement Needs to Evolve in 2026 as Market Volatility Accelerates
What 2025 Made Clear
2025 has been a remarkable yet challenging year. Demand signals remain uncertain, and the pressure to do more with less has never been higher. Teams are entering 2026 with leaner headcount, tighter budgets, and shorter timelines—all the while managing wildly unpredictable demand and geopolitical dynamics. The conversations I’ve been having with procurement and sourcing leaders have reinforced a consistent point: the volatility in demand, pricing, and component availability we experienced in 2025 isn’t easing. It’s accelerating. Some industries are rebounding while others continue to struggle. The uncertainty isn’t going anywhere.
From my own work in this space and from talking to hundreds of customers, the best outcomes don’t occur during the actual negotiation. They come from being prepared—negotiating with some facts, quality signals that are leading indicators of opportunity or distress and using the right comparisons from the beginning. The problem? Most buyers are negotiating with a limited or narrow set of facts, and that is a real disadvantage.
Your Suppliers See the Market. You’re Flying Blind.
Most buyers use familiar reference points, such as the last price paid, distributor quotes, or RFQ responses. But these only give a limited view and don’t show how the broader market is buying. At the same time, your suppliers see demand trends from many customers and understand competitive behavior and pricing patterns in ways buyers can’t match.
In our recent webinars with procurement leaders, over a third said that the lack of reliable market pricing data was their biggest negotiation challenge. Without a clear view of the market, you can’t tell the difference between fair prices and prices that suppliers are just trying to get away with, which puts you at a disadvantage before you even start negotiating.
The Volume Discount Lie (And Why It Won’t Die)
If you’ve ever had a supplier tell you, “Buy more, and you’ll get a better price,” you know the frustration. You increase your order size in the hope of savings, yet the cost per component barely changes.
Here’s the truth: manufacturers set prices based on overall demand, how much they can make, and what’s happening around the world, and not on your order of 10,000 or 100,000 units. When we asked people in our webinar about their biggest negotiation problems, over half said that ‘not ordering enough’ was their main challenge. The idea that buying more always gets you a discount is common, but it doesn’t really explain what sets the price.
Real power over pricing doesn’t come from ordering more. It comes from knowing what’s possible in the market and showing that you understand this during negotiations.
The Questions That Actually Move Pricing or Allow Securing Capacity
Instead of opening with, “Can you do better?” The most effective procurement leaders lead with questions that create transparency. They come prepared with market context and use it to guide the conversation. Asking, “What’s driving this price?” or “Why are buyers with similar volumes paying 20% less?” signals that you understand how the market actually works and that standard explanations won’t hold. When volume isn’t the real lever, they ask, “What would need to change for this price to move?” or “What incentives can I create for the supplier for me to secure capacity for this year or the next few years?”
The leaders I speak with aren’t winning because they negotiate harder. They’re winning because they walk into conversations with insight that their suppliers don’t expect. One leader I recently spoke to has negotiated capacity and flat pricing on memory for 2026! And mind you, this is a typical smaller industrial customer. When you can show what pricing looks like across comparable buyers, backed by data that’s difficult to dispute, negotiations shift from defending positions to uncovering the real drivers behind price.
Market Visibility Isn’t Just Nice to Have. It’s Your Only Real Leverage
Benchmarking isn’t about finding the lowest price someone paid and demanding it. Real benchmarking shows you what pricing is achievable for organizations like yours with similar volumes and requirements. It highlights outliers and helps you understand where you have room to negotiate versus where you’re already competitive.
When we polled our webinar audience, nearly 70% of participants correctly understood that benchmarking helped show what’s achievable—not just comparing against the lowest price ever paid. But over a third of buyers also report that suppliers often challenge their data and resist target pricing. The quality of your market intelligence determines whether you’re taken seriously.
Understanding your position relative to the market transforms negotiations from discount-seeking to fact-based alignment. Suppliers can’t argue with market data the way they can dismiss a single competitive quote. When you learn to do this effectively, you realize why RFQs are a poor and ineffective way to achieve better pricing.
Learn to prioritize your scarce time.
Issuing RFQs for every single SKU in every single commodity, with the intent of finding the “best” price, is a sub-optimal way for sourcing. Frankly, that isn’t sourcing at all—it’s akin to shopping. Strategic sourcing is about targeting the areas of spend that either help you improve your bottom line faster or secure allocation risk sooner.
Most procurement teams recognize this, but execution breaks down at the SKU level. When resources are stretched thin—as they are right now—organizations often know they should not treat every component equally, yet they lack clear visibility into which SKUs are out of line. Without reliable insight to pinpoint where pricing or risk is concentrated, teams default to spreading effort evenly across all components, resulting in diluted impact and activity that looks strategic, but isn’t.
Procurement’s Next Advantage
Better negotiation results don’t come from being tougher. They come from being clear, well-timed, and prepared. The teams that succeed in 2026 won’t just work harder; they’ll work smarter.
Volatility isn’t going away, but your approach to handling it can change. In 2026, the winning procurement teams won’t be those who negotiate the hardest. They’ll be the ones who negotiate with real market understanding, which isn’t just a nice advantage—it’s essential.
A blog post from: Varun Narayanan | Vice President of Business Transformation
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