CPOs struggle with staff cuts and risk

7 June 2009

08 June 2009

Pressure on procurement functions to achieve more with fewer staff has intensified sharply in the past six months, according to exclusive research by SM's sister title CPO Agenda.

A May 2009 survey of 133 CPOs and other senior purchasing professionals revealed 79 per cent have suffered internal hiring freezes, while 36 per cent have been forced to make redundancies as a result of the economic downturn. This compares with 60 per cent and 28 per cent respectively in October 2008.

As well as seeing resources reduced, 93 per cent said pressure to slash supply costs had intensified as a result of the recession, compared to 76 per cent in 2008, and 66 per cent have seen their savings target increase.

"There's a lot of pressure to reduce our cost base through smarter negotiating," said Iain Palfreman, head of sourcing at cash management company Vaultex UK.

While 81 per cent have asked suppliers for price cuts (compared to 73 per cent last year), there is also a growing awareness of the risk of key providers going out of business. Seventy-five per cent said they were "concerned" or "very concerned" about the prospect of a supplier failing in the next two quarters, while 47 per cent have already experienced this.

"You have to be aware of the vendor's financial risk and security of supply challenges," said Brian Schulties, vice-president at US-based manufacturer General Cable.

Overall, 97 per cent said their function's objectives, priorities or resources had been affected by the recession, compared to 76 per cent six months earlier.

SMjun2009

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