Accenture Spend Trends Report: The Drivers of Category Trends Start with Economics

Who says that former sell-side analysts on Wall Street can’t do something better with their lives – like helping millions of procurement and supply chain managers make more informed decisions? My old friend and colleague Mark Hillman has shown there is hope for former financial minds that want to make a difference to industry.

Mark recently joined Accenture after his former employer, Procurian, was acquired, and is leading up market intelligence efforts. One of this first public reports was released in early August. The Q2 edition of Accenture’s “Spend Trends” is a great piece of research that stands far above the type of analyses that knowledge process outsourcing (KPO) firms would charge clients a fee to deliver. Moreover, you don’t even need to register for it!

In a series of posts in the coming weeks, I’ll share some of the highlights from the report as well as our own commentary on the market observations and recommendations. In the analysis, Mark and his team kick off their market analysis at the highest possible level, showing a level of nuance and understanding of global macroeconomic factors driving procurement and supply chain activities before taking this thinking down to a number of select categories, showing how macro-trends are affecting specific areas of business – and categories we source and manage every day in procurement.

To kick things off and whet your appetite for what the report covers, we present below some excerpts from the macro view presented at the front of the analysis.

Here are quick excerpts on inflation, wages, credit conditions, and capacity utilization:

“More Signs of Cost Inflation Emerge Despite Economic Speed Bumps, but Near-Term Opportunities Exist: As the economic recovery has progressed and companies have begun to slowly increase investment to meet demand, signs of inflation are emerging. U.S. unemployment is now down to 6.1 percent while Eurozone unemployment hovers at 11.6 percent, and several sectors in the U.S. are seeing labor cost pressure—namely logistics, tech, manufacturing, and oil & gas related occupations.”

“A July 2014 survey by The National Association of Business Economics (NABE) found that 43 percent of respondents’ firms had increased wages, up from 35 percent in an April 2014 survey—and for the first time since October 2012, no respondents reported declining wages at their companies. Europe’s recovery is trailing that of the U.S., but similar inflationary pressures are present in sectors like logistics. Armed with the right local market intelligence, however, savings opportunities remain.”

“…Credit conditions remain favorable, banks continue to loosen credit standard, interest rates are low, and credit growth is increasing …  [and] capacity utilization is increasing and approaching the long-term average at the same time that the age of fixed assets is at multi-decade highs [driving the need for additional capacity and capital investment].”

Stay tuned for more coverage of the report.

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