I'm getting ready to leave my room to attend day two of the CPO's Summit. But before I dash out, I thought that I would share a few of my notes from the first presentation yesterday afternoon, which focused on the economic environment surrounding Spend Management today.
Tom Stundza, Executive Editor of Purchasing Magazine, had a number of insightful things to say about the current macro-economic climate. As we've talked about here, here, here and here, hurricane Katrina had a significant impact on the entire economy. But what is the big picture? In reality, according to Purchasing, "buyers are now paying the highest prices [of all] in recent months for specific raw materials." While many observers thought steel would be the commodity most impacted by Katrina, prices for non-ferrous and precious metals have actually risen more in the months following the disaster.
Overall, according to Purchasing, economists are trimming their growth forecasts for the US economy for later this year and next (for Q405, forecast growth has dropped from 3.6% to 3.2%). Growth in 2006 is expected to come in around 3.3%.
What does this mean for Spend Management? Organizations of all sizes must stay vigilant and plan ahead for a period of somewhat unpredictable commodity pricing and moderate overall economic growth (while staying wary of inflation and a fluctuating dollar). And perhaps most important, they should develop an overall supply risk management strategy to deal with uncertainty.