Procurement managers must examine every aspect of their operations to help their companies survive the economic downturn, says Robin Jackson of consultants ADR International.
In ADR International’s latest eBulletin he says: “You will need to establish a new set of objectives for procurement in your business that supports its survival. These need to be communicated to people throughout the organisation to galvanise support and promote excellent procurement as a being of fundamental importance.”
Jackson, ADR International’s CEO, recommends several ways good procurement can help companies survive the current economic conditions.
These include making sure that input prices follow the market down, reviewing all contracts to avoid built-in price hikes and fully analysing the supply base to reduce the risk of suppliers failing.
Simon Aldred, Director of ADR Sourcing, the sourcing division of ADR International, advises companies to examine the “tail” of their spend – the 20 per cent of procurement that is outside the big, core areas.
The procurement tail is often neglected because it usually involves many suppliers and tackling them is seen as an overwhelming task, he says, but it can deliver big savings.
“The key is a systematic, professional approach built on a strong foundation of industry knowledge. You can start with a detailed analysis of current spend and develop a quick-win strategy of consolidation, aggregation, streamlining and market testing. In this way, you will quickly achieve sustainable results.”
Robert Sobcak, director of ADR International’s Central and Eastern Europe division, says companies are revising their strategies for buying goods and services from developing countries. Increasingly they are looking for low-cost companies rather than low-cost countries, he says.
“Experience shows a clear erosion of the traditional split between low-cost and high-cost countries, as many suppliers in emerging countries are unable to deliver benefits because of poor performance and productivity and high logistics costs.
“Buyers are therefore seeking companies which offer the most advantageous relationships, whether they are located in an emerging region or, for example, Western Europe.”
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To view the eBulletin please visit www.adr-international.com/eshot/eShot_Apr09.html
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