Compliance Management

Why is procurement relevant for compliance management?

Business obligations to comply with regulations and standards are nothing new. For years, businesses have adopted practices to meet requirements at national or international levels. In today’s rapidly evolving business landscape, regulatory demands expand in scope and complexity at an unprecedented rate. Topics like Sustainability and Cybersecurity are moving from niche concerns to board-level priorities, and organizations must now adapt faster than ever to meet both legal obligations and rising stakeholder expectations.

Procurement is uniquely positioned to lead the charge in business compliance. Often, regulation and requirement owners are located in different parts of the organization, with procurement tasked with enforcing requirements onto suppliers. By stepping beyond a transactional role and actively shaping supply chain compliance, procurement can validate requirements through a commercial perspective. This includes implementing robust governance frameworks, integrating compliance into suppliers’ processes, and embedding regulatory obligations into contracts.

Done right, procurement can transform compliance from a burden into a competitive advantage – driving resilience, trust, and long-term commercial sustainability.

How can procurement actively affect company adherence?

In our work with clients across various industries, we’ve seen both mature organizations with a strong culture of compliance and organizations facing significant challenges. There is no one-size-fits-all approach as effective compliance management is highly influenced by industry context, company size, and specific regulatory domains involved, such as sustainability or cybersecurity.

That said, some principles apply universally, and our experience shows that procurement can take a far more impactful role in driving the compliance topic than they currently do. Below are three areas we believe procurement can – and should – make a difference.

Enabling compliance through structure and processes

Procurement is often the bridge between the business and its suppliers. Naturally, responsibilities like lifecycle management and coordination of assurance processes fall within its remit. This makes procurement a key enabler of internal alignment and supplier adherence. Our experience shows that when procurement has a seat at the table where compliance requirements are defined, supplier interactions and adherence improve, and many issues are prevented before they arise.

Similarly, procurement is also well-positioned to test and refine new compliance processes before they are rolled out. Since regulatory requirements are often interpreted and developed by other functions, procurement brings a practical, commercial perspective that ensures new processes are workable and aligned with adjacent processes or systems. This not only increase compliance and supplier interactions, but also reduces risk of supplier pushback or costly counter-requirements.

The key is to design a procurement organization that actively champions compliance, is dedicated to support colleagues, and drives adherence by default, not exception.

Requirement setting through agreements/contracts

Regulatory requirements can be strict, complex, and unevenly distributed across a company and its supply chain. What seems simple internally may be disruptive for suppliers, especially if not clearly communicated or commercially viable. Procurement plays a critical role within this domain. As commercial experts, they should ensure that contractual templates and agreements reflect regulatory requirements in a way that suppliers can realistically adopt. Preferably without triggering unexpected or unreasonable cost increases.

Involving procurement early in contract development brings multiple benefits. They know the supplier landscape, what’s worked in the past, and where friction points lie. Their insights help the organization tailor requirements to meet both internal compliance targets and adapt external requirements to match supplier capabilities.

By involving procurement’s valuable commercial perspectives, an organization can ensure that their agreements have clearly articulated requirements that are legally sound and audit-ready, supporting certification efforts and reducing compliance risk.

Review effects on business and financial impact

The cost of compliance isn’t limited to internal implementation. Introducing new regulations and requirements that impact your supply chain often results in new costs. This is especially apparent when added requirements don’t apply uniformly across the suppliers or are hastily put together to close a potential gap.

Procurement is uniquely equipped to assess and mitigate these impacts before they arise. With their commercial expertise, they can lead cost-benefit analyses, model supplier acceptance levels, and evaluate how new requirements affect total lifecycle costs and ROI. In some cases, procurement’s insights and analyses could even lead to challenging the business model (e.g., make vs. buy).

Similarly, procurement should leverage their commercial expertise and aforementioned analyses to challenge how regulatory texts are interpreted by the organization. This helps ensure requirements are commercially viable and strategically sound. By doing so, procurement enables the company to avoid overwhelming suppliers with unrealistic requirements and establish a sustainable implementation.

Two key learnings to boost compliance rate and internal adherence

Cross-functional collaboration

Effective compliance management depends on strong collaboration across departments, including Legal, Finance, IT, Operations and, of course, Procurement. Establishing cross-functional structures that leverage each department’s strengths allows organizations to design robust processes and validate whether compliance requirements are feasible both internally and across the supply chain.

Involving key stakeholders early leads to smoother implementation and greater accountability. By fostering a collaborative environment, organizations can ensure that compliance efforts are not only comprehensive but also sustainable.

One proven strategy is to appoint super users – compliance champions embedded in the business who support colleagues with day-to-day questions and promote a culture of adherence. Regular training sessions on topics like contract templates and supplier follow-up processes further embed compliance into daily operations and reinforce shared ownership.

Adapt to “awareness by design”

A proactive approach to compliance starts with awareness by design – embedding compliance into the way people work. This means designing robust governance structures and making information easily accessible so employees can stay informed about relevant requirements, processes, and expectations at all times.

Here, digital tools are a key enabler. Systems that guide users to “comply by default” make the right actions the easiest to take. For example, contract management platforms enable efficient tracking and supplier follow-up, while sourcing systems can include built-in checkpoints to ensure continuous compliance throughout the procurement process.

The procurement tech landscape is broad, and no single solution fits all. To truly transform compliance from a burden into a business advantage, organizations must select and implement tools tailored to their specific needs. Done right, this approach reduces supply chain risk, increases transparency, and boosts business value. All by making compliance intuitive, not intrusive.

Turning compliance into competitive advantage

In a world of growing regulatory complexity and rising stakeholder expectations, compliance is no longer just a legal obligation – it’s a strategic lever. Procurement, with its unique positions at the intersection of internal functions and external partners, is ideally placed to lead the way. Our experience shows that when procurement takes an active role in shaping compliance structures, embedding requirements into contracts, and assessing commercial impacts, organizations see stronger adherence, reduced risk, and greater business value.

The key is to move from reactive enforcement to proactive enablement. This happens through cross-functional collaboration, smart use of digital tools, and a mindset of “awareness by design”. When done right, compliance becomes not just manageable, but a source of resilience and long-term sustainability.