TL;DR — Procurement’s new reality:
Procurement negotiates contracted lead times with suppliers. Supply chain deals with variable lead times in execution. Planning systems almost always use the contracted number — and in many cases, it hasn’t been updated since the ERP was first installed.
The cost of that mismatch adds up fast. At a 98% service level, safety stock requirements roughly double when you properly account for lead time variability alongside demand variability. The two interact multiplicatively. A planning system using a fixed 45-day contracted lead time when delivery ranges from 30 to 60 days is carrying buffer stock against a fiction.
There’s a behavioral dimension that makes it worse. If a supplier historically delivers in six weeks, procurement will often quote eight weeks internally to avoid blame when something goes sideways. Now you have padded lead times feeding into safety stock formulas that are already overcompensating. The buffers absorb the noise, so nobody measures delivery performance, and the lead times never get corrected. Most organizations have some version of this loop running quietly in the background, converting procurement’s static assumptions into millions of dollars in unnecessary inventory.
None of this is new. What’s changed is what procurement is being asked to deliver. Inverto now puts margin, quality, and innovation on the CPO agenda alongside savings. ISM expanded its charter in 2025 from procurement to end-to-end supply chain management. But the operating model hasn’t kept pace. At Manifest 2026, Nordstrom’s CPO Karoline Dygas put it well — procurement isn’t linear, but most of the tools are built to be linear. Deloitte’s 2025 CPO Survey found 57% of CPOs identifying siloed working as their top barrier to delivering value, and four in ten said they lack the technology infrastructure to work cross-functionally even when they want to.
The lead time problem is a symptom of something bigger. After procurement places a purchase order, it largely loses sight of that order until it arrives at the dock. Or doesn’t.
The 2025 tariff frontloading episode put this on display at scale. Procurement teams across CPG and retail aggressively pre-purchased ahead of tariff implementation dates. The Port of Los Angeles recorded its highest single-month container volume ever. McKinsey’s Supply Chain Risk Pulse Survey found 45% of companies facing tariff impacts were increasing inventories as their primary mitigation strategy.
Procurement was doing exactly what it’s supposed to do — locking in pre-tariff pricing, executing cost avoidance. Supply chain absorbed the warehousing costs, port congestion, and cash flow consequences of those decisions. What both functions needed was an execution layer that could quantify the downstream inventory and working capital impact of forward-buying commitments before the PO was placed.
McKinsey’s practitioner work, validated across sectors for more than a decade, has consistently shown that integrating procurement and supply chain functions can reduce total inventory levels by at least 15%. Industry-standard carrying costs run 20-30% of total inventory value annually. On a $100 million inventory position, that’s $20 million a year at the low end.
S&OP is supposed to be the bridge between these two functions, but it fails most of the time. Procurement drives unit costs down while inflating packaging lot sizes. Planning gets forced to produce more SKUs on assets designed for fewer changeovers. Commercial hurdle rates inflate demand forecasts that procurement sources against — creating excess raw material commitments before a product even launches.
Meanwhile, the Hackett Group’s 2025 U.S. Working Capital Survey found a telling split in how the top 1,000 US public companies managed cash. Days payable outstanding improved 3% year-over-year. Days inventory outstanding didn’t. Companies found ways to optimize what they owe, but what they hold remained stubbornly flat.
Everything above points to a structural need. Procurement’s commitments and supply chain’s execution reality need a shared, continuously updated operating layer — one that predicts problems, recommends actions, and orchestrates responses across systems.
FourKites’ Intelligent Control Tower provides that through its Inventory Twin. The foundation is a digital twin of inventory that unifies what’s in the warehouse with what’s in transit, so procurement and supply chain are working from the same position for the first time. AI-powered risk prediction identifies potential stockouts weeks in advance and quantifies the financial impact so teams can prioritize. The system generates intelligent recommendations — stock transfers, supplier expediting, alternate fulfillment — calibrated to the risk at hand. And when action is needed, Digital Workers orchestrate execution across PO management, carrier follow-up, and dock scheduling without waiting for someone to notice the problem and send an email.
For procurement specifically, this means contracted lead times are continuously corrected against real transit performance. Purchase orders are tracked from placement through delivery, with exceptions surfacing early enough to act on. The downstream consequences of ordering decisions — working capital impact, warehousing costs, service level implications — are quantified and shared in real time rather than discovered after the fact.
Procurement’s mandate is expanding for good reason. But the broader mandate stalls without an execution backbone that connects procurement’s commitments to what happens downstream. Prediction, recommendation, and orchestration — powered by AI and grounded in real-time execution data — are the infrastructure that makes the new scorecard work.
Learn more about how FourKites Inventory Twin helps procurement and supply chain teams work from the same real-time intelligence.
