17 January 2002 | David Arminas
UK suppliers able to deal in euros will enjoy a growing competitive advantage for winning business, a leading management consultancy has predicted.
Neil MacKenzie, a supply chain consultant with Cap Gemini Ernst & Young, said suppliers that can offer clients euro-invoicing will be able to use it as another bargaining tool as clients increasingly seek an outlet for the euros in which they have been paid.
"We must remove currency barriers because barriers inhibit best practice as far as open sourcing goes," he said. "The sooner purchasers use the euro, the better.
"In the coming year, as people see the euro, touch it and get more used to, it there will be a lot of pressure from companies to move towards it quickly."
MacKenzie's comments come just after 12 member states of the European Union began to use the euro as a hard currency.
However, there is still a heated debate in Britain about whether the UK should one day enter the so-called "euro-zone". Britain, Sweden and Denmark have pledged to join the single currency when economic conditions are right, according to their respective governments.
But purchasers in the UK have been dealing in euros as a paper-based currency for as much as three years.
Chris Whiting, group purchasing officer at Q8, the retail petrol operation of Q8 Petroleum Company, believes that 2002 will see a growing number of purchasers setting up euro accounts and seeking suppliers that can deal in the new currency.
"The euro is a benefit for stabilising contracts against fluctuations in exchange rates," he said. "But for purchasers, it depends on where value can be shown to the company by using the euro."
Suppliers whose contracts come up for renewal this year should be asking themselves if a lack of ability to deal in euros will cost them business, said Ninian Wilson, vice-president of global procurement at telecommunications company Cable & Wireless Global.
"We've had euro accounts in the UK for a year but adoption has been slow," he said. "When we review contracts we will also review their currency situation."
Within the UK in 2001, payments by Cable & Wireless Global to its UK suppliers amounted to about r100,000. In the rest of Europe, however, they were just under r10 million.