PROBLEMS IN PURCHASING:
Purchasing managers are sure to be challenged by a number of different problems over the next couple of years, but according to consulting firm Ernst & Young, pricing pressures and attracting the right talent will rank right at the top of the list. Following close behind is a widespread concern with the procurement function's ability to manage change effectively in the current economic environment. The firm recently asked 257 senior executives around the world to discuss what factors they feel will have the biggest impact on the procurement function in their organizations. A "downward pressure on prices" was cited by 33% of respondents, while 26% agree that "price fluctuations of critical commodities and services" is among the top issues likely to impact their business. Also finishing high on the list of concerns is the "requirement to change existing operating models" (28%) and the "growing complexity of global supply chains" (27%). But while downward pressure on prices is viewed as critical, it comes at a time when there is consistent and accelerating upward pressure on input costs, says Adrian Edwards, the firm's global head of supply chain and procurement. "Collectively, these issues create a significant barrier to companies achieving sustainable high performance," Edwards explains. "To respond to these challenges, companies must be able to manage complex transformation programs." The ability to deliver against the major issues facing the organizations is severely constrained, with 20% of organizations not confident that their sourcing function has the ability to effectively manage change arising from price fluctuations, and the same, too, for downward pressures on prices. Despite the low confidence in dealing with pricing pressures, "controlling and containing costs" (52% of respondents) and "driving EBITDA growth" (37%) are the top two initiatives that will be a priority for the sourcing function over the next two years. In...
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