Economic pressure forces buyers into ‘panic saving’

30 January 2003
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30 January 2003 | Robin Parker

European purchasers have been “panic saving” in the past year in the face of increased economic pressure, a survey claims.

According to The European Spend Agenda 2003, backed by the London Business School, nine out of 10 firms are trying to reduce the unit price of the goods they buy, compared with half of companies last year.

Jamie Anderson, programme director of the Centre for Management Development at the school, criticised businesses’ “kneejerk” reaction to pressures by cutting costs in this way.

Spending on supplies dropped by 12 per cent on average last year because of the economic climate, and more than two-thirds of firms plan to reduce their supply base this year.

Those with set savings targets plan to cut purchasing spend by 9.1 per cent this year.

Purchasing heads at 200 large firms in the UK, France, Italy, Germany and the Benelux countries responded to the poll, commissioned by e-commerce software firm Ariba and conducted by IT consultancy Vanson Bourne.

Average spend remained static at €266 million. Graham Opie, director of Vanson Bourne, said this suggested purchasers were still too focused on basic cost-cutting at the expense of other efficiency measures, such as improving compliance with approved suppliers.

“Purchasers have no one clear beacon of where opportunities lie to improve their savings - they have a direction but not a goal. This is not sustainable as you cannot keep just cutting costs and the supply base forever,” Opie said.

Although the proportion of purchasers reporting directly to the board rose by 10 per cent in the past year to 53 per cent, only 36 per cent of UK purchasers communicated directly with senior management.

• The European Spend Agenda 2003 is available from Octopus Communications on 01753 672755

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