Accenture Spend Trends Q3 2014 – Summary Analysis

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The latest Q3 2014 Accenture Spend Trends report is out. My old friend Mark Hillman is the lead author of the quarterly study (Mark is currently manager of insight and analysis at Accenture Operations). This months’ study highlights category trends in a range of areas – logistics, IT, marketing and media, corporate services, travel, CAPEX, commodities/base materials, MRO and energy. It also provides a macro-overview of the current state of the economy.

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We’ll explore this edition in detail in the coming week (offering a number of posts spanning category highlights). What I like most about Mark’s analysis, in general, is that it brings the macro-understanding (he was a sell-side analyst once) that ties in an overall economic perspective (think GDP, trade, etc.) with category depth, gained from his colleagues on the sourcing side (a number of people who I used to work with back in the FreeMarkets days, ironically, which are now a part of Accenture).

Here are some of the overall highlights Mark captures on a macro-level:

  • “Labor markets continue to slowly improve. As unemployment rates fall (US 5.9%; Eurozone 11.5%), pockets of wage inflation are emerging in sectors like manufacturing, technology and logistics.”

Spend Matters analysis: Watch out for upward price pressure in certain categories as wage increases work their way through the supply chain.

  • “Business capital investment continues to expand, up 4% in 2Q 2014 and 6% in 1Q 2014, with full-year forecasts at 7%. High corporate cash levels, low interest rates and increasing capacity utilization all support this cycle, potentially pressuring input costs.”

Spend Matters analysis: CAPEX spending is back. And, it is likely to increase, which of course means, in certain markets, greater competition for scarce product and service resource – and likely upward price pressure in certain markets in 2015.

  • “Energy prices pulled back strongly in the quarter with oil declining 20% from its peak and natural gas remaining soft. Yet geopolitical risks remain, highlighting the importance of monitoring prices in real time to capitalize on opportunities and aligning strategy with price-risk tolerance.”

Spend Matters analysis: Lower energy costs are a net positive for procurement and supply chain. Yet only the most astute procurement organizations will gain every penny back from closely managing existing contracts and negotiating new ones (with energy, oil and natural gas components).

Kudos, once again, to Mark and his team for an excellent job. Stay tuned as our coverage continues.

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