The outlook for procurement in 2011 (part 1) – the glass half full

How is it going to be for procurement and procurement people in 2011?  A year of success and great contribution to organisational success, recognised by top management?  Or a difficult time, buffeted by external factors that might cause us or our organisations major problems?  Well, if we could foresee the future with any accuracy, we'd be billionaire currency traders, so rather than making firm predictions, we'll look at both the positive and negative possibilities of the year ahead from a procurement perspective.  We'll start today with the positive outlook; and then give the other side of the picture tomorrow.

We may see steady economic recovery in Europe (and the US) in 2011.  Slightly cooling demand in China and the other BRIC countries will take the edge off commodity inflation, while maintaining demand in those countries for German cars, French wine and perfumes, British pharmaceuticals and music.  While life won't be easy in Greece, Ireland and Portugal, the Euro holds, and the population in general grudgingly accepts another year of austerity as being necessary for the greater good.

All this gives a favourable environment for procurement. Price pressures on raw materials in particular reduces, and again procurement can declare impressive 'savings' to the Board.  Despite cuts in the public sector, there are minimal job losses in the profession as Governments across Europe appreciate the need for effective procurement and spend management.  Good people are much in demand from public and private sector organisations.

The positive performance of many procurement and supply chain technology firms in 2010 continues, as sensible organisations realise the importance of good data and the ability to analyse spend; e-sourcing, auctioning and optimisation; and effective P2P processes.  Some major acquisition and merger activity strengthens the market further and gives customers more choice of providers who can offer a full range of capabilities.

Increasingly, technology enables procurement to control spend without having to manage every element of the sourcing cycle or the transaction themselves, enabling professionals to spend more time on truly strategic activities.  We see more CPOs at Board level as they demonstrate their strategic contributions in areas such as fundamental make / buy decisions, seeking innovative suppliers who can provide competitive advantage, and managing performance and relationships with the most critical providers.

And managing risk in the supply chain becomes established as perhaps THE key role of procurement, and it is boom time for content and software providers who can support procurement's efforts here.  Annual reports start to regularly feature a statement from the CPO on the topic; as the Deepwater BP case becomes the biggest legal saga in history, the one thing that becomes clear to all organisations is the need to manage suppliers and supply chains in a more structured and risk-conscious manner.

So with positive market conditions, technology supporting greater effectiveness, and top level focus on the role of the profession, it all looks promising.  Employment in procurement grows, as do professional Institutes, interim and consulting roles make a comeback;  and 2011 proves to be a very good year for the profession.

OK, so that's the positive prediction... tomorrow we'll look at how things might not work out quite as well...!

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