Don’t relax during recovery, buyers told

27 January 2010

27 January 2010 I Amy Rowe

UK buyers must continue to slash costs and innovate following news that the economy has officially come out of recession.

This was the message from both public and private sector purchasers in response to figures showing GDP growth of 0.1 per cent in the last three months of 2009.

CIPS chief executive David Noble said that although his organisation welcomed the encouraging and positive signs, the severity of the recession meant the economy was “not out of the woods”.

He stressed that purchasing had an ongoing role in the UK’s emergence from the financial crisis.

“The procurement profession must continue to help business to innovate and differentiate – not only to survive the current economic landscape but also by preparing to thrive in better times,” Noble said.

Procurement coach Neil Deverill said “cautious commitment” was in order and warned buyers not to rush into any strategy changes because of the slight upturn.

He said purchasers should continue to use market intelligence from suppliers to ensure they take advantage of further growth.

“Buyers should be looking at what their competitors are committing to in the market with their suppliers. They should also be keeping an eye on how suppliers’ backlogs are doing and whether their order books growing,” Deverill advised.

John Durrell, director of consultancy Associated Procurement, agreed with this careful, strategic approach. He told SM that the profession’s “meat axe days” were over.

“Before, people were just hacking costs. What we’re seeing is a more thoughtful approach where people are trying to link their supplier strategies with wider-ranging business issues, rather than just trying to bail more costs out of the business to keep it afloat.”

Public sector buyers predicted tough times ahead. “Far from relaxing now, buyers need to be much more focused and more heavily engaged,” said David Loseby, head of procurement and contract management at Westminster City Hall.

Richard Jowers, supplier relationship manager at Essex County Council, added: “We are still focused on cutting costs. I think the difficulties in the public sector remain for the short term.”

But some buyers anticipated a bright future for procurement and said the challenges of cutting costs as well as retaining quality would make the profession stronger in the future.

Robin Jackson, CEO of procurement consultancy ADR International, said: "Procurement will come out of these difficult times stronger and better placed to deal with unpredictable conditions.”

* See SM’s feature on how to prepare for the upturn in the next issue, out on 4 February

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