Procurement Outlook 2013 - Strategies to Maximize Savings
The global economy progressed little in 2012; developed economies were in a state of flux and emerging markets showed signs of weaknesses after a prolonged period of growth. The Presidential elections in the United States, policy paralysis in the European Union, and political fragility in emerging markets were chief contributors to economic uncertainty. This forced many companies to curtail new investments, restrict budgets, and focus on generating cash from existing operations.
We saw increased savings targets for CPOs at most of our clients, and most of these CPOs met, or exceeded, even these stretch targets. Overall, 2012 was a very good year for procurement professionals. Savings were in double digits across many categories.
From a macro perspective, 2013 looks to be little different from 2012. The Economist predicts that the world economy will grow only slightly to 3.5 per cent (at purchasing power parity), from 3.1 per cent in 2012. Although the Eurozone will pull out of the recession, growth will be tepid.
In 2012, many companies grew by piling up cheap debt (especially in the U.S.). In 2013, we may not see such generosity from governments. As austerity measures are stepped up, cost cutting will be the key focus area for governments and enterprises alike. Supply chain innovation and procurement transformation will continue to remain favored levers for generating cash to sustain long-term growth. This, coupled with a more balanced supply and demand market, leads us to conclude that 2013 will be a great year for procurement and supply chain professionals.
In the following report, GEP has highlighted eight procurement trends that will have a significant impact on the sourcing and procurement function, and has provided a market outlook of eight broad categories that can be leveraged to maximize savings in 2013.