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Ageing but active

More older people will drive demand for new services and a new industrial strategy

The demographic shift toward older populations is not a distant forecast: it is already reshaping procurement and supply chains in measurable ways, and the implications for procurement professionals are profound.

For organisations sourcing from or operating in ageing economies, workforce availability and labour costs are growing concerns. For those with supply chains passing through younger, faster-growing economies, the opportunity is to build supplier relationships early in regions where the working-age population will dominate global labour supply by 2050.

The numbers underscore the urgency. In 1997 there were 9.4 working-age people available to support every senior worldwide, according to research from McKinsey. By 2050, that ratio is projected to fall to 3.9 globally, and to just 2.2 in North America. Supply chains that rely on labour-intensive manufacturing or logistics are already having to plan for this dramatic shift, a structural transformation that needs to be modelled into sourcing strategy today.

Workers in ageing societies will need upskilling. A peer-reviewed study published in the Journal of Purchasing and Supply Management found that “silver workers” – procurement professionals aged 50 and above – rarely benefit from targeted career development planning, and that training programmes seldom offer them training in advanced analytics, e-procurement, or supplier-innovation skills.

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This problem of failing to upskill the ageing workforce is compounded by the threat of institutional memory loss as experienced practitioners retire. Organisations that do not systematically transfer supplier relationship knowledge between different generations of employees are at risk of forfeiting decades of irreplaceable experience – and perhaps not realising until it’s too late.

Gen Z job scarcity is an opportunity for procurement and supply

“In relation to the war for talent, procurement must work hard to get into the consciousness of Gen Z and those young adults entering the workforce,” says CIPS' global economist Dr John Glen. “There is an opportunity as entry level jobs are in decline generally across the economy. If procurement can raise its profile as a provider of entry-level jobs within the developing AI environment, then we should be able to recruit some of the best young talent coming to the market."

Demographic shifts of this scale present a genuinely compelling opportunity for procurement and supply chain professionals willing to think strategically about the long term. 

Ageing populations make last-mile delivery care-critical, elevating reliability and trust alongside cost and speed for procurement and supply chain professionals
 
For example, in the ageing economies of the global north, older people living alone without the assistance of younger relatives are becoming an ever-larger share of urban consumers. This means last-mile delivery is increasingly important not just for convenience, but for care. For procurement professionals designing or overseeing logistics contracts, the changing nature of consumers’ dependence on supply chains means reliability and trust are becoming as commercially significant as cost and speed.

"Demographic shifts of this scale present a genuinely compelling opportunity."

You can read an account of how real-time demand sensing is becoming a vital skill for procurement and supply chain professionals serving increasingly densely populated cities in India in one of our earlier articles in The Great Conversation series. 

As things stand, the over-60s already account for around 30% of spending globally, and the demographic attracts far less commercial attention than its buying power warrants. Procurement professionals who understand the preferences, logistics requirements, and product needs of older consumers are getting ahead of one of the most significant demand shifts of the coming decades.

How underfunding of ageing affects the UK profession

Expert opinion: Dr John Glen 

“Ageing is something which has not crept up on us, however, planning for ageing may not have been all that it should be,” says Dr John Glen, CIPS’ global economist.

“There is massive underfunding of old age, and hence there is a requirement on the part of public-sector procurement to get more for less. This is complicated by the fact that the public sector is often procuring from the private sector. Procuring best value is therefore a minefield.”

“In the UK, the NHS [National Health Service] is under pressure from an ageing population and underfunding. Currently we are caught in a perfect storm of high capital spending requirement due to years of underspend,” he says. “Procurement is sat in the middle of this maelstrom trying to provide an answer to a set of mutually incompatible needs given the fiscal context in which those needs exist.” 

 

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