Germany booms, Ireland prays: confusing (economic) times for procurement people?

At least when we're in the middle of boom or bust, you know where you stand.  Boom, and procurement is trying to hold back inflationary price demands from suppliers, but may find that their own organisation is less bothered about holding down costs or expenditure.  Supporting growing demand and production may be highest on the priority list.

Bust, and procurement faces high expectations, but may well be higher profile than ever, with a supply base amenable to negotiation.  On the other hand, the danger of supplier failure requires close attention.

So how does November 2010 look? Confusing for many in procurement, and very different across European countries.

In Germany, recent announcements show GDP was up 3.9 percent in the third quarter compared with the same period last year, with manufacturing in particular looking very buoyant, as developing countries showing a strong appetite for luxury vehicles and high-tech equipment.  In Ireland, and southern Europe, countries are still in economic difficulties, and business confidence is low. As I write this, we wait to see what comes out of the various European level meetings about the Irish financial situation; the next steps for Ireland, creditors and other EU countries are not clear.  Portugal, Greece and Spain hold their breath and wait to see what is in store for Ireland, knowing they could be the next in line.

In the UK, the stock market looks healthy, yet suppliers with dependence on the public sector are falling like skittles.  Inflation has shown an unexpected increase; unemployment has fallen slightly, but most new jobs are part-time.  As in other countries including the US, there is little clarity around whether inflation is the big risk that procuring organisations should be guarding against; or is it deflation, supplier failure and the risk  of double-dip recession that should be occupying our thoughts?

There are however a couple of pieces of general advice that apply to procurement everywhere and anywhere.  Firstly, keep close to your key supply markets and suppliers, and be aware of how external circumstances might affect their ability to support your organisation.

And secondly, keep close to your key internal stakeholders.  Being aligned with your own organisational goals, as we've commented before, is essential for procurement staff and leaders who want to survive and thrive.  If you have that alignment, procurement can perform well in pretty much any external environment.

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