The "I" Word — To Worry or Not to Worry

If deflation is the scourge of economists and central bankers, then inflation is perhaps the most feared term in Spend Management circles. And that's because dealing with overall economic inflation and commodity and part inflation can make lowering costs difficult. But unfortunately, inflation is part of life, and in declining price markets for end products, inflation will almost always bring lower margins and greater risk. Over on European Leaders, Richard Edwards shared some economic forecasts from the UK and the continent on the current economic environment. According to Edwards, "At the start of this year Andy Kyte, a leading analyst at Gartner, claimed that inflationary pressures would be one of the major challenges facing procurement over the next 12 months ... 'Core inflation' in the eurozone ... remained at 1.9% in July but jumped above the headline rate for the first time in three years, prompting fears that more interest rate rises could be on the way."

Is Andy correct? Well, contract management is still not the giant deal that Andy has been predicting for years, but on this prognastication, I think he might be right -- just a few months off in his prediction. But regardless, I believe that world class procurement and operations organizations will take a lead role in their organizations looking at overall inflationary numbers wherever they're doing business from a forecasting and budgeting perspective. Because when prices do rise, it's better to be prepared than to be surprised.

Jason Busch

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