PROCUREMENT IN THE ECONOMIC CRISIS
We concluded the survey questionnaire with respondents’ views on the economic challenges that Greece is facing. Clearly, recession has had a major impact on the business environment. However, crisis creates opportunities and it is within this environment that we believe procurement and supply chain functions can plan a vital role and contribute to innovation, risk management, profitability and the overall growth of an organisation. It is not surprising that the majority of the organisations in the survey (80.2%) have been feeling the pressure to deliver cost savings. In periods of economic downturn, when sales and revenue targets are not being achieved, procurement functions are put under the spotlight and expected to deliver savings that have a direct impact on the bottom line. Certainly, a percentage decrease in spend has a greater impact on profitability than an equal percentage increase in revenue. The pressure for cost savings is followed by the challenges of low cash flow (43%) and a reduction in the procurement and supply chain function’s budget (37.2%).
Figure 61: WHICH OF THE FOLLOWING ARE THE BIGGEST CHALLENGES OR ISSUES YOU ARE FACING DURING THE ECONOMIC CRISIS?
Pressure for delivering cost savings Low cash flows Reduction in the budget of the procurement and supply chain function
80.2%
43%
37.2%
Disruption in the supply chain Low levels of stock
36%
30.2%
Low quality of products and services
18.6%
Need to adopt eSourcing Need for closer collaboration with suppliers
17.4%
10.5%
0
10%
20% 30% 40% 50%
60%
70%
80%
90%
What is surprising is that less than one in five (17.4%) organisations feels that the current economic environment has prompted the need for closer collaboration with suppliers. Economic stagnation usually has negative impact on the relationships between members of a supply chain, and we would expect that organisations would recognise that investment is required to address this challenge. Winning organisations look for remedies and support not only internally but also with their external partners. Lastly, only one in 10 organisations regards the adoption of eSourcing as a challenge. We have highlighted earlier in this report that there is a need for Greek organisations to understand the processes and benefits of eSourcing and start using technology to gain both financial and non-financial benefits. Given the economic conditions, we would have expected this to be higher on our survey respondents’ agendas. To overcome the challenges that the economic crisis has brought, most organisations (63.6%) call for better control and analysis of spend, followed by a programme of cost-saving initiatives (44.3%) and the adoption of robust procurement processes (44.3%).
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