As natural disasters continue to impact on manufacturing, supply and prices, ICT buyers need to shift their ethos towards buying for today and tomorrow.
Mercato Solutions estimates that 70 per cent of private and public sector IT buying for consumables, desktops and printers is conducted on a day-to-day demand or reactive basis. This is in the context of a highly volatile IT supply chain where price and stock change daily. When there is a requirement, the ICT buyer – who often multitasks as an IT manager or procurement champion – contacts suppliers, potentially benchmarks prices and makes a purchase.
However, the Tsunami in Japan and floods in Thailand have significantly affected component and finished product delivery, shortages and ultimately price hikes. Reports say a shortage of hard disk drive shortages resulting from the Thai floods is still affecting the supply of lower end cheaper laptops, desktops and servers.
Buyers demanding such items reactively have to settle for more expensive, higher-end products where stock is available. The impact of natural disasters has brought into sharp focus the acute underperformance of a reactive ad-hoc approach to buying. A lack of forward planning is hitting IT procurement budgets, yet this could be overcome because regular buys or larger one-off purchases can be forecast to a large degree.
Now is the time for buyers to kick-start a longer term best practice strategy and forward plan buying to genuinely buy more for less while maintaining fulfilment of demand and therefore business continuity. The reactive view is costly and it must change.
Buyers need to analyse average purchase volumes on key routine items and put in place monitoring facilities or alerts that enable them to watch stock and price levels. When stock or price move towards critical levels, the purchaser knows to act proactively and at the best price. In this way, purchasers can reduce risk and minimise costs and threat to business continuity.
Market research conducted using Mercato ITelligence, an IT price and stock benchmarking tool, has previously found that of 1,000 respondents, 81 per cent were not getting the IT deals they expected with margins as high as 474 per cent unearthed.
Price and stock in the supply chain change readily and natural disasters accentuate the challenge for time-strapped multi-tasking ICT buyers trying to achieve best value on every purchase. Better planned and researched proactive buying is proven to yield greater compliance and more-for-less budget compared to ad-hoc, reactive and fragmented buying behaviour. Simple support structures exist to facilitate a proactive culture.
☛ Al Nagar is Mercato Solution’s head of benchmarking