We have a phantom recession. Are we in one, going into one or it's not going to happen? Is inflation out of control? What will happen to corporate profits?

If you listen to the government, everything will be OK. We are only in a slowdown. Prices are not out of control. The credit crisis is almost over.

If you go to a gas station, into a store, try to sell your house or talk to your suppliers, you will hear a different story. The price for everything (except housing) is going up. Goldman Sachs estimates that oil will hit $200/barrel within 24 months. Boone Pickens says that oil will hit $150/barrel by year end.

How do you maintain profitability when faced with slowing top line growth and rising prices? Be more creative. Look for savings in the traditionally untouchable areas of indirect spend. Categories such as Advertising, Insurance, Benefits, Telecom, Software and Services often yield significant savings. More often than not, sourcing experts do not get the opportunity to look at these categories because the executives that own the spend do not want someone looking over their shoulders. "Our relationship with the supplier will be hurt" is often the excuse that is used to avoid an objective sourcing effort.

No matter who you believe, your bottom line does not have to suffer in this economy. Reducing spend is a legitimate way to profit. Objective, fact based negotiations will get you results without hurting your supplier relationship. Get started now just in case the government is wrong!
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Steve Belli

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