Procurement has a 'remarkable' impact on 'transmitting' global economic shocks

26 August 2011

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29 August 2011 | Adam Leach

Purchasing and supply chain has a remarkable impact on transmitting global economic shocks, according to Channel 4 News’ Faisal Islam.

Speaking to SM, Islam, the show’s economics editor who will chair this year’s CIPS Conference, said: “Shifts in economic temperature are spreading far more quickly as a result of super-fast procurement that’s sensitive to changes in demand, its impact is quite profound.”

Referring to steep energy costs, he said: “High oil and energy prices are causing a structural shift in supply chains.” Drawing on his experience of interviewing business leaders, he added: “They all describe the incentive to move supply much closer to demand, partly driven by the high cost of transportation. You would assume being able to produce something at its lowest possible cost would win out, but it’s changing and it’s changing because of the oil price.”

Islam said despite the current economic crisis in the Eurozone there were many good suppliers in crisis-hit countries. “I can’t see any reason for caution as a result of the crisis when dealing with suppliers in those countries. The only people that should be careful are those that lend money to their governments and banking systems.”

He also called for buyers not to shy away from taking some risks to get noticed. “Too many people in British corporate culture don’t want to take the sorts of risks you see taken in the US. They worry about failing but it’s only by doing that that you get anywhere. It means you’re trying quite hard to do something different.”

 

☛ You can read the full interview in the September issue of Supply Management and online here.

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