Comet in trouble and disappointing CIPS Markit Procurement Manager Indices

It was sad to see Comet, the UK's second largest electrical retail chain, go into receivership last week.  The events highlighted the critical nature of supply chain for retailers of any sort. One of the final straws was Comet's inability to get Trade Credit insurance, which guarantees suppliers will be paid in the event the buyer (retailer) has problems paying.

Some suppliers then refused to supply, whilst others used an unusual legal provision - retention of title, which meant they could reclaim their stock in the case of problems. Some did, sending lorries into Comet depots to take back their goods.

But that's no good for suppliers of services, so I suspect firms providing IT, facilities management or professional services to Comet might have some problems getting what they're owed out of the receivers.

That's something for procurement people and of course suppliers to think about. Should suppliers be more cautious than many are about their customers' financial state? This recession has been unusual, certainly in the UK, in terms of how few bankruptcies there have been given the wider economic situation. But that could still change.

And on that note, the Markit / CIPS  manufacturing index was gloomy last week.

At 47.5 in October, from a revised figure of 48.1 in September, the seasonally adjusted Markit/CIPS Purchasing Manager’s Index® (PMI®) fell for the second successive month and to its lowest level since July this year.

Growth in the services index slowed to a marginal pace - so  just as the UK economy looked to be picking up (with recent GDP figures up 1%), it may be that we're heading into a triple dip recession. Certainly, I wouldn't get too excited about prospects just yet.

So if you are a procurement person in a firm that isn't exactly in A1 financial strength, you may need to be thinking more about persuading suppliers to continue supplying, rather than aggressive negotiations on price. I'd love to hear from anyone (anonymously if necessary) who has been in that situation - what techniques did / do you use?

And good luck of course to Comet staff - hoping for a better future for you.

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