Procurement budgets to rise

17 August 2011

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17 August 2011 | Adam Leach

Investments in technology and machinery, coupled with strong economic growth in the Asia-Pacific market will result in procurement budgets increasing by an average of 11 per cent over the next year, according to a report.

The Global CEO Business Outlook Survey 2011–2012, published this month by ICD Research, surveyed 1,285 CEOs, board members and other senior executives and found that almost half (48 per cent) expect their procurement budget to rise by between 5 and 25 per cent.

The increasing power of the emerging Asia-Pacific region was evident in the report, with companies in the region reporting an average purchasing budget of $47 million (£28.6 million) compared with $35 million (£21.5 million) for US companies and $22 million (£13.4 million) across the rest of the world.

Companies increasing spend to expand operations cited reasons such as developing product innovations, purchasing machinery and technology. A board-level executive from a rail infrastructure company said: “Our company is planning to increase our procurement budget by 25 per cent as we plan to expand our operations to manufacture electric rail equipment and buses.”

There were also reports of businesses increasing the budget to deal with rising material costs and investing in automating existing processes to reduce costs long term. A board-level executive from a US ground support company said: “We plan to automate 30 per cent of our existing operations with the use of modern technology by 2012, and in the process we have planned to increase our budgets by around 15 per cent this year.”

The report also found that 36 per cent have already deployed an e-procurement system while another 53 per cent said they would evaluate whether it is worth implementing.

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