How are our numbers looking, America? On the surface, they are looking rather ideal. We are at a period of steady GDP growth, the stock market is booming, and there is little inflation. But are these classic benchmarks the best criteria for a sustainable and robust economy? Let’s look at the job market.
The unemployment rate is low, but potential workers who aren’t working or looking for work aren’t included in that statistic. Workers who are looking to work full-time and only work part-time are also left out. That’s not to mention the student loan debt crisis. This might indicate a halt in spending for recent graduates as the bulk of them will begin their careers with considerable debt. It can be hard to predict what all the figures truly indicate, but let’s turn to Procurement professionals to hear their thoughts.
Suplari, a Spend Accountability & Financial Performance solution provider, hosted a study to determine how Procurement and Finance professionals were feeling about a potential economic downturn. According to a survey, most procurement professionals (30%) believe a recession will hit the U.S. within the year. Why? Several economic factors have led financial professionals to adopt a fatalistic outlook. These include high credit risks, rocky job markets, and hefty new tariffs. From professionals in high tech to those in healthcare, everyone’s worried and everyone has their go-to, industry-specific response strategies. It seems as though the uneasiness decreases as you span from the East to the West, however, as Eastern survey respondents tended to be more optimistic.
Suplari asked respondents how they predict a future recession will impact their sectors. Travel, facility expenditures, and office equipment rank as the top three categories ‘most scrutinized in times of an economic downturn’.
The unemployment rate is low, but potential workers who aren’t working or looking for work aren’t included in that statistic. Workers who are looking to work full-time and only work part-time are also left out. That’s not to mention the student loan debt crisis. This might indicate a halt in spending for recent graduates as the bulk of them will begin their careers with considerable debt. It can be hard to predict what all the figures truly indicate, but let’s turn to Procurement professionals to hear their thoughts.
Suplari, a Spend Accountability & Financial Performance solution provider, hosted a study to determine how Procurement and Finance professionals were feeling about a potential economic downturn. According to a survey, most procurement professionals (30%) believe a recession will hit the U.S. within the year. Why? Several economic factors have led financial professionals to adopt a fatalistic outlook. These include high credit risks, rocky job markets, and hefty new tariffs. From professionals in high tech to those in healthcare, everyone’s worried and everyone has their go-to, industry-specific response strategies. It seems as though the uneasiness decreases as you span from the East to the West, however, as Eastern survey respondents tended to be more optimistic.
Suplari asked respondents how they predict a future recession will impact their sectors. Travel, facility expenditures, and office equipment rank as the top three categories ‘most scrutinized in times of an economic downturn’.
Smaller businesses tended to predict a shorter period before a recession than larger ones did. They also reported feeling less confident in their ability to deal with an economic slowdown. While 61% of respondents claim they feel their company is prepared, another 30% either don’t know or don’t believe they are ready for such an event.
How will procurement teams cope in a worst-case scenario? Contract renegotiation and Vendor consolidation stand out as the top two ways companies will work to cut costs.
No matter the industry, Procurement leaders will need to decide which cost reduction strategies to employ in the event of a recession. One of the main reasons you want to maintain a flexible budget is to prepare for uncontrollable situations that could hit your company financially. When a recession eventually occurs, other departments will turn to the procurement team to see how well they’ve enabled the company to stay afloat. The possibility of a recession will remain a hot topic until one occurs. Businesses will want to feel confident in their ability to handle one; they’ll know if Procurement is not prepared.
How exactly will procurement units be affected? Suplari provides 10 top concerns that will plague Procurement teams during a recession:
How will procurement teams cope in a worst-case scenario? Contract renegotiation and Vendor consolidation stand out as the top two ways companies will work to cut costs.
No matter the industry, Procurement leaders will need to decide which cost reduction strategies to employ in the event of a recession. One of the main reasons you want to maintain a flexible budget is to prepare for uncontrollable situations that could hit your company financially. When a recession eventually occurs, other departments will turn to the procurement team to see how well they’ve enabled the company to stay afloat. The possibility of a recession will remain a hot topic until one occurs. Businesses will want to feel confident in their ability to handle one; they’ll know if Procurement is not prepared.
How exactly will procurement units be affected? Suplari provides 10 top concerns that will plague Procurement teams during a recession:
Although it's an unfortunate event that nobody wants, a fiscal slump might be the chance your procurement team has needed to demonstrate its value. If you plan properly, you may be able to protect your company from collapsing when things take a turn for the worse. Suplari offers four main tips to prepare for a crash.
1. Guarantee that your procurement teams have proper visibility into their supply base, spend profile, and contract activity.
2. Ensure that cost-reduction decisions are made with the guidance of your procurement team.
3. Track supplier information (stability and operational risks) to optimize tail spend and suppliers costs.
4. Lastly, even if a recession isn’t in the cards for a few years, any efforts towards planning for one will not be a waste. Cutting costs is more likely than not going to help the company regardless. The pressure of an impending recession might even lead you to discover new, more creative cost-reduction strategies.
We encourage Procurement teams to behave proactively in the days and months leading up to the next recession. As many professionals know, even the most innovative and efficient Supply Management strategies don't always work. If you're going to establish a truly recession-proof organization, you'll need to act quickly. A recession could be a make or break opportunity for Procurement. It could mean rising to the level of trusted business partner or finding its credibility tarnished.
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