The PIU is starting its research into the future. We are asking leading procurement organisations about their 2013 plans.
Although the extent to which companies have finalised their plans for next year varies, procurement executives seem to share a uniform gloomy outlook. But they believe that they may be able to beat the market.
It is interesting to see fairly negative pessimistic forecasts for the market on the one hand, weighed against optimism for internal positioning on the other.
It would be unfair to say that procurement is relishing another good recession, but many are seeking to use the expected downturn to maximise their own position. For many this is part of the function’s evolution to a more value-adding role, in which procurement can contribute to revenue generation in time for declining sales. For others, the opportunity to show purchasing mastering of lean operations will place the function in a central position.
We have found elsewhere in PIU research that procurement tends to do well during recessions. It is one of the few areas of business that see increased resources during a slump.
The next period of economic difficulty may be challenging, but it is important to remember that many economies have only just recovered from the previous recession. Greece has been in continuous recession for the past five years.
Few self-respecting procurement organisations will have much remaining fat to trim. How procurement can manage its way out of this crisis – without its usual reliance on a cost-cutting toolbox – will be an entirely new challenge.
The cost savings that come from new initiatives or approaches deplete with time. The next move, if procurement wants to show continued and new usefulness in hard times, is to develop new initiatives. Buyers must ask themselves new questions: how can I add broader value to the business? How can I improve productivity? How can I increase profitability?
Although 2013 will be a tough year, procurement may emerge as a function that is more important in creating value for the business. Even through next year may be a bitter pill to swallow, those companies that are strong enough to survive should emerge in a position of greater alignment and strength.