CPO Agenda
HELLO CPO| SIGN OUT OR SUBSCRIBE Get a 40% discount
Search
Sections
Supply management jobs
Linkedin
Analysis
About
Contact
Resources
CPO Network
TOPICS:
STRATEGY
COST MANAGEMENT
0
SUPPLIER RELATIONS
CAREER
RISK MANAGEMENT
SUSTAINABILITY
MORE TOPICS
0
New
Print
this
page
Comments
PROCUREMENT PREDICTIONS FOR
2013
As 2013 approaches, Soroosh Saghiri and Carlos Mena make their predictions and
examine how procurement and supply management plans may need to be adapted.
By Soroosh Saghiri and Carlos Mena | December 2012
Email
What does the future hold for procurement in 2013? © iStock
The International Monetary Fund (IMF) has predicted slow growth in the global economy. Sluggish
growth in developed economies will affect supply from emerging markets and expanding industries
in developing economies. In the case of Europe, economists appear optimistic about policies to
improve financial conditions in 2013, and expect GDP to grow by about 1 per cent in the second half
of the year. European buyers will have another year of tight purchasing budgets, where efficiency
will be top of the agenda.
In the UK, the Office for Budget Responsibility expects a growth of 1.2 per cent for next year.
However, the risk to the UK’s coveted AAA rating will remain, and access to credit might become
more challenging for businesses. Accordingly, the government will be under greater pressure for
tighter control of spending, which affects the UK public procurement decisions and actions. CPOs
will have a clearer idea about the government procurement–related policies by March 2013, when
the Chancellor’s Spring Budget will be revealed.
Apart from articulating a response to the difficult economic outlook procurement professionals
should have a number of key considerations in their action plan for 2013.
A more strategic role for procurement
Procurement is not seen as a cost cutting function anymore. Moving away from a transactional-focus
role, it contributes more to profitability, and value adding. Procurement managers should seek
greater responsibilities in more strategic areas such as global sourcing, outsourcing, supplier
relationship management and mergers and acquisitions. CPOs should take the opportunity of trying
economic times to gain greater involvement in strategic decisions and a stronger presence on the
board.
Talent management
Procurement talent availability is expected to remain a challenge in 2013. As the economy is
expected to recover, skills shortage will be exacerbated, creating a cost and risk for firms without a
developed pipeline of will-qualified procurement professionals.
A broadening and increasingly strategic role for procurement demands a new deeper talent pool.
Finding the right talent to oversee the pivotal procurement responsibilities requires a thorough
understanding of the capabilities necessary to lead a best-in-class procurement processes.
Real cost of late response
Volatility in supply and demand has become the norm. Thus, managing uncertainty remains a major
challenge for procurement. Accordingly, on top of advance planning, businesses need to be resilient
to unpredictable changes in the market. Agile procurement and responsive suppliers are key to
managing uncertainty.
Consistent with idea of agile procurement, re-shoring or near-shoring are key for 2013 procurement
plans. For years, the default option for many businesses has been to outsource to low-cost counties
far away from the consumer markets. However, as the cost and risk of offshore sourcing increases,
switching back to local or regional suppliers for the products destined for European consumers can
support agility in supply management.
Procurement managers together with operations and sales managers need to re-analyse the total
cost of ownership, and re-evaluate if past sourcing decision are still valid for 2013 and beyond. New
sourcing decisions need to take non-explicit costs (for example, cost of channel inventories, safety
stocks, and changing suppliers) into account, and carefully assess the impact of such decisions on
customer service.
Global supply management and emerging risks
Global sourcing will remain a major trend in procurement for majority of products - while cost is not
the only motive. The focus of developed economies on emerging markets needs global suppliers too.
However, new markets also bring new risks, such as the possible loss of major accounts, different
life cycles, quality issues, length and variability of lead-times, poor visibility, natural disasters,
terrorism and regulatory changes. New types and levels of risks need new contingency plans.
The economic outlook looks bleak and pressures to reduce cost and enhance value are bound to
continue. Procurement professionals should see this as an opportunity to assert their presence and
influence strategy and drive performance.
ჶ Dr Soroosh Saghiri and Dr Carlos Mena are senior research fellows at the Strategic
Procurement and Supply Management Research Centre at Cranfield University
0
0
New
Print
this
page
Comments
Email
RELATED LINKS
Talent spotting
Adressing market volatility
Executive debate: How to you execute global sourcing quickly and effectively?
ABOUT
ADVERTISE
TERMS AND CONDITIONS
SITEMAP
PRIVACY
CONTACT US
© Supply Business. Supply Business is published by Redactive Publishing LTD, 17-18 Britton Street,
London, EC1M 5TP. Tel: 020 7880 6200.