Revisiting the Fall of the Euro — Procurement and Supply Chain Implications

It was not so long ago that we wrote a multi-part series (read the posts here, here, here and here) examining the potential decline and even ultimate fall of the Euro and what it would mean for procurement, supply chain and trading organizations. At the time, our hunch suggested things would be in for a shake-up. Now, it's proving true. The Euro really is on its last hour if Germany does not take a massive leadership role to save it. This role would prove extremely costly, in large part because the other countries dragging down the EU are not as sober about the prospects. They also have outlandish requirements.

For example, as I read in multiple sources over the weekend, Spanish banks want to be bailed out like the Fed stepped in to bail out the US banks during the last crisis. Yet Germany (smartly, in our view) wants some strings attached, lest its crisis-engulfed EU brother to the West runs out of the bar without paying for its tapas and sangrias (i.e., binding Spain's government to the loans with country strings attached -- not just corporate strings). Regardless, the situation is quite dire and there will undoubtedly be huge implications for procurement, supply chain and trading organizations in the next few months.

In the coming weeks on Spend Matters PRO, we'll be investigating our previous commentary from the general site (see posts above) in more detail, adding more to help practitioners and those who advise them navigate the current crisis. Among the topics we'll explore, and we believe all Spend Matters readers should be considering:

  • Specific supply risk impacts of the crisis (played out over multi-month scenarios)
  • Potential commodity price impacts that will continue to play out
  • Sourcing strategies that companies should engage in given the uncertain climate (including how to deploy specific negotiation strategies and technologies -- the what, when and how)
  • Sourcing arbitrage scenarios
  • The role of supply chain finance during the crisis
  • Ability to leverage non-standard contracting and risk mitigation strategies (e.g., physical and financial hedges, insurance contracts, etc.) -- and where they are most appropriate
  • Inventory -- friend or foe during the crisis (and at what level of the supply chain)

Stay tuned. And subscribe to Spend Matters PRO if you want the inside line on navigating through the Euro crisis.

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- Jason Busch

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