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11 April 2012 | Anna Scott
Small rises in staff numbers and procurement budgets are expected this year in line with increased globalisation of the buying function and governance activity.
The Hackett Group's annual Key Issues Study – 2012 Procurement Agenda: Enabling Enterprise Growth Without Disabling Profits found procurement leaders in the Global 1000 companies expect a 3 per cent increase in the number of full-time equivalent staff (FTEs) in the purchasing function, compared with a two-percentage point increase in FTEs in 2011.
And although down from last year’s three-percentage point increase, operating budgets are still expected to rise by 1 per cent.
In addition, the research found procurement organisations plan to increase their percentage of FTEs in low-cost regions such as India or China from the present figure of 16 per cent to 25 per cent. The research states that while companies should be striving to reduce supply chain risk, they must also develop greater agility of the supply base and procurement function and increase contract flexibility.
With slow economic growth being experienced in developed markets, procurement executives are turning their attention to emerging market presence and, in two to three years’ time, 37 per cent of supply chain activity within the companies is expected to be globalised.
However, the study also states that “procurement will need to do a lot more in 2012 with basically the same resources it had in 2011”, noting that volatility has become the “new normal”.
Input prices, customer demand and talent availability are all expected to be high on the agenda throughout 2012 and have greater volatility than in the pre-crisis period of 2003 to 2007.
Some 30 per cent of the companies surveyed are expecting changes of 25 per cent or more in input prices and 22 per cent expect the same volatility relating to the talent pool available to them.
“The coming year will test the mettle of every procurement organisation,” the research states. “Many objectives need to be balanced, including supporting enterprise efforts aimed at finding new sources of revenue and standardising and systematising [sic] processes amid volatile operating conditions.”