2026 - Managing risk exposure versus managing costs

2026 has been the fundamental differentiator in procurement team capabilities. It is a story of managing risk exposure versus managing costs. 

Almost everyone started off with a forecast that is nowhere near close right now. For example, see what Bloomberg forecasted for oil prices in Dec-25. $60 per barrel was their project for 2026. 3 months later, we are already at $100+.

The question CPOs are now asking is not "How do I reduce another 5% from this contract?" but rather, "Do I even have supply coming in next quarter?"

But I want to go one level deeper than just the security of supply here. I want to question what one needs to do as CPO for exposure management. 

In simple words, there are 3 specific themes in my view for a CPO to look into:

1.) Energy-intensive categories: Logistics, manufacturing, and packaging are all in active repricing mode. Chemicals are also hit hardest. Any contract without an energy index clause is exposed to uncapped cost increases. You also need to manage production costs for your suppliers. It is no longer about "that's your problem and not mine." If you dont manage your supplier costs (especially the strategic ones), sooner or later those cost increases are going to hit you.

2.) The Copper crisis no one is talking about: While everyone is focussing on oil and semiconductor price spikes right now, there is almost another one sitting on the fence. Copper, a key material closely tied to IT and AI infrastructure, reached an all-time high in 2025 dec. I was also reading somewhere that no one can enhance copper mining capabilities because the time from discovery to production has now increased to 18 years! (So, if you discovered a major copper deposit today, you won't be able to ship a single kg until 2043 at the earliest)

Copper has already entered into deficit from 2025 onwards (Bloomberg report). Why is copper important? Data centres, grid expansion for EVs, every power grid, every AI server farm, they all need copper! AI infra is one of the most copper-intensive capital investments in modern history.

So, in a nutshell, I dont think you can ease yourself out of the semiconductor/chip crisis. Add another copper-driven price spike scenario soon.

3.) So, the action playbook?

a.) In my view, dont negotiate to fix your 3-6 months problem. Rather, renegotiate contracts (Add index clauses, risk-sharing mechanisms, trigger-based renegotiation windows, and establish common safety stocks). If you can't negotiate, reduce the exposure by finding alternate suppliers

b.) Map your tier 1 and tier 2 suppliers' exposure, especially on their production costs (Raw materials, energy, etc.). Given how volatile the macroeconomy is, the traditional internal view of managing only your costs is no longer effective. You need to look at the whole board.

How are you looking at your procurement costs for 2026 and 2027? DM me your innovative ideas and approach! Supernegotiate