Changes are needed to make procurement more effective in the new global economic climate, say specialists ADR International.
This could mean increasing procurement from low-cost countries to new regions – possibly including the US -- and creating an international “talent bank” of people who can be recruited at any time.
In ADR International’s latest eBulletin CEO Robin Jackson says procurement leaders will need to focus on resisting suppliers’ price hikes rather than seeking cost reductions.
Procurement teams will need more skills and will have to look for “creative supply chain solutions”, says Jackson. This could include sourcing more from low-cost countries and outsourcing some procurement operations.
World oil prices are at the heart of the “new economic order”, says Jackson in his article titled “It’s the cost of fuel, mate” – based on a chance comment made by a motorway service station attendant about his lack of customers.
“There’s no quick fix for what will become a long-term problem,” Jackson says. “Prepare your business for a blizzard of price increases and reduced margins and prepare your team for a significant increase in workload.”
ADR International’s North America CEO Bill Michels says the US could become the next destination for low-cost country sourcing.
“Falling prices for the US dollar over the last two years have changed the equation for American-made goods,” he says. The price of US goods has dropped by about 20 per cent.
This is a short-term situation, however: “The weak currency is opening up opportunities for many companies. History suggests that these moments don't last forever, and smart companies are figuring out how to capitalise on them while they can.”
Richard McIntosh, head of ADR People, ADR International’s permanent and interim recruitment division, says taking advantage of sourcing from low-cost regions depends on having the right kind of specialist talent on board.
This could mean creating a “talent bank” of suitable people ready to be recruited when the time is right.
“With the right talent so hard to find, and with high employee turnover, particularly in the current ‘hot’ regions such as Shanghai where demand is far outstripping supply, it makes sense to build and maintain a talent bank of suitable resources -- a pool of talent kept warm and connected to your organisation.”
About ADR International
ADR International is one of the world’s longest-standing global procurement consultancies, established in 1986. It applies its knowledge and expertise to help its clients improve every aspect of their procurement activity. ADR International provides expertise in procurement consultancy, training and development, sourcing, permanent and interim recruitment, technology and audit.
ADR International works with several global corporations to improve their procurement effectiveness. Clients include The Walt Disney Company, Pfizer, Nokia and Alcan and with public sector organisations in local government, policing and the NHS.
ADR International is based in Oxfordshire, UK. ADR International (North America) is based in Ann Arbour, Michigan. ADR International also has offices in South Africa and Australia.
For more information please visit www.adr-international.com
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