A recent report by Loudhouse, sponsored by BravoSolution and covered in Industry Week in their article on Purchasing Officers: Confident Now, But is Trouble Ahead?, found that 69% of the CPOs surveyed had not examined the impact of the last six months on their supply management strategy, which leaves them exposed to potential long-term problems.
This is problematic, especially since the research study found that many purchasing professionals are currently following short-term strategies that could lead to long term problems. As the article states, CPOs can deliver cost savings today by hard negotiation, however tomorrow’s efficiencies must be realized through evolving business strategies and addressing the top three procurement challenges of ‘cost saving,’ ‘speed,’ and ‘visibility’. But this hard negotiation can backfire. After all, as per a recent CPO Agenda study, which quantified the doom and gloom in the market today, half of the respondents have already experienced the bankruptcy of at least on key supplier since the year started, and over three quarters of CPO respondents are (very) concerned about the prospect of other key suppliers going out of business before the year is over.
So if you want to avoid trouble ahead, be sure to insure that you leave your suppliers some margin, that you pay on time, and that you monitor your suppliers health.