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JANUARY2015
2015 Trend ReportA Reference Guide for Procurement
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CONTENTS
8. Macroeconomics
9. Politics
10. Commodities
11. The big stories that will impact b
12. 2015 world event calendar
PROCUREMENT IN 2015 THE WORLD IN 2015
1. Reviewing 2014: Procurement in the news
2. What will impact procurement in 2015
3. CPO intentions 2015
4. Talent (management)
5. Consumer views of the supply chain
6. Procurement technology: provider predictions for2015
7. Category intelligence
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Part 1:Procurement in 2015
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WHAT WILL IMPACT PROCUR
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CPO INT
We will add a few headcount to actively manage
significant areas of spend previously unaddressed.
We are adding new resources in Procurement
Excellence and Supplier Quality Development foreach region (North America, South America,
Europe, and Asia).
We are restructuring to have more 'front
line' capability (including sourcing andsupplier performance and risk managementsupport) and less 'back office'. It is not an
FTE reduction, but rebalancing.
Procurement has to contribute to efficiency programs
and cost leadership. This means doing more with less.
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EXECUTIVE WORK-
CPOs that are more contented with their work-life balancegenerate higher savings.
Happier CPOs structure their organisation differently, with
more category manager and senior management support.Many mini-CPOsare spread across the organisation,reducing the strain on management in decision-making.
Structured organisations help optimise decision-making
54 hours average hours worked
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CATEGORY INTELLIGENCE: W
Newly modernised warehousing can improve supply-chain operations in emerging
Global price forecast
+2.4% Warehousing servi
markets will continu
Modern warehousinexpected to grow a25% and 30% until
This modernisationthe greater accessisupply chain techno
The cost of RFID tefall by 90% to $0.1
There will be increabetween suppliers oas the number of pl
Modernisation of warehousing processes and increased technological uptake inemerging areas such as India, will result in:
Increased warehousing efficiency
Lower operational costs
Increased supply-chain visibility
Less risk of product damage or loss.
Indo Arya (India)
Allcargo Logistics
RAPID MODERNISATION OF WAREHOUSING SPACE IN EMERGING MARKETS
Source: Procurement Leaders,Category Planning Guide 2015
THE FUTURE
PROCUREMENT IMPACTSUPPLIERS OF M
WAREHOUSING IN
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CATEGORY INTELLIGENCE:
Bundling services means sharpness of pricing competition, cost
control and the ability to choose the right suppliers are lost
Gain category-specific expertise
Manage costs, obtain value for money
Increased category-specific innovation
Fleet Facilities Logistics
In 2005, 77% of global contracts were outsourced as a bundledprovision compared with 46% in 2013. This is expected to declinefurther in 2015.
PROCUREMENT BENEFITS
CATEGORIES AFFECTED
INSIGHT
Fleets are n
able to get tvalue by wor
one leasing c(Stuart Donnelly, chief
Fleet Logis
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Part 2:The World in 2015
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MACROECONOMIC
Can we be optimistic about 2015?Generally, things are looking pretty positive. There arepotential headwinds ahead, though, particularly in Europe,which is where the biggest risk is coming from right now.The European growth story has deteriorated; we saweconomic contraction in several areas in the second quarterof this year and in the third-quarter growth was prettymeagre. Were not seeing any help from the governments
here, unlike what weve seen in the UK and the US in a bid
o get credit markets moving again.
hat exactly are the implications for
procurement organisations sourcing
extensively from, or actually operating in,
Europe?Credit growth in Europe is still negative and confidence is
very weak. Unemployment is also rising pretty aggressively,so its a really different story to the one were seeing
elsewhere. Europes situation is hardly helped by the crisis
in the Ukraine on the extremity of its eastern borders andwhile that spat remains as turbulent as it was back in thesummer, the ongoing nervousness of procurementorganisations operating in eastern Europe is easy tounderstand.
What about the export market?For those organisations sourcing from Europe, though, theapparent inability of the European Central Bank to instilanything approaching confidence could be good news, withexports from the eurozone likely to remain cheaper for theforeseeable future, partly as a result of the fall in value ofthe euro. On the flipside, stagnant activity in Europe andflat-lining growthor perhaps even another period inrecessioncould have a significant impact on thosecompanies relying on Europe as its primary export market.
Will deflationary pressure challenge the
global economy?I dont think this is really a key concern, although its a
potential concern. The key driver behind this drop ininflation is really, though, a good story because its the drop
weve seen in energy prices. That has really been theequivalent of a tax cut, not just for the consumer but also forbusinesses. You cant avoid putting petrol in your car but if
its 10, 15, 20% cheaper than it was 12 months ago, that
gives businesses more money to spend elsewhere.
With 2015 upon us, thoughtsare inevitably turning to whatthe year holds in store, and
from a procurementperspective at least, itappears the economic
headwinds that have batteredthe function since the onset
of the financial crisis arefinally being replaced with a
calmer, much far lessblustery outlook. JamesKnightly, economist tells
Procurement Leaders what
procurement organisationscan expect the global
economy to throw up in thenext 12 months.
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MACROECONOMICS: GDP GR
The IMF cut its 2015 global g4.0% to 3.8%) amid geopolitiuncertainties.
European growth is predicteddriven by countries in the em
category (2.9%). Europe is atrecession entering 2015.
Japans high level of public dpopulation mean it will grow b2015, contributing to overall wAsia (2.2%).
Sub-Saharan Africa will growand terrorism threaten its pro
PREDICTIONS
In 2015, the bulk of growth will come from Africa and Asia
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METAL COMMODITIES
The aluminium market outside China is set to record its first deficit i n nine years in
2015 following production cuts and an Indonesian ore export ban, a turning point thatcould be the start of a prolonged shortfall as demand recovers.
After years of chronic oversupply, the market is beginning to tighten as producers cutproduction to battle rising costs, Indonesia bans bauxite ore exports and demand foraluminium rises, particularly from U.S. auto makers. (Reuters)
We buy a product produced from aluminium scrap. The risk is that the demand from
scrap exceeds supply given there are new users entering the market. (PL
commodity buyer)
OPINIONS
PL COMMODITY BUYERS FORECAST
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FOOD COMMODITIES:
With the continued political strife in the Ivory Coast, expect an increase in cocoa
price next year. (PL commodity buyer)
The risks to cocoa prices could be exacerbated if the Ebola epidemic spreads to
cocoa producers in West Africa. (World Bank)
As a result of increased futures prices and major companies partnering with farmers
to educate them on husbandry, farming techniques are bound to increase inyields/production. As such, we expect cocoa to remain steady to sli ght uptick insupply for the future. (PL commodity buyer)
OPINIONS
PL COMMODITY BUYERS FORECAST
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THE DRIVE TO SINGLE
SYSTEMS
One focus point for CPOs in 2015architecture. Best-of-breed mode
becoming less attractive.
60% of CPOs are looking toglobal systems to meet their techin 2015.Source: Procurement Leaders, Procurement IT Sy
Architecture, 2014
30% of CPOs are looking tobest-of-breed systems in 2015.Source: Procurement Leaders, Procurement IT Sy
Architecture, 2014
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JANUARYLithuania adopts the euro.Official formation of Eurasian Union (customs union between Armenia,Belarus, Kazakhstan and Russia).
FEBRUARYPersonal biometric scanners for personal banking become available.Presidential elections in Nigeria.
MARCHCricket World Cup is held in Australia and New Zealand.Expiry of Russian-Ukrainian gas deal.
APRILNASA's Dawnspacecraft arrives at the dwarf planet Ceres.
Second baby of Prince William and Kate Middleton due.
MAYUK general election.Opening of Masdar City in UAE, a zero-waste and zero-carbon city.
JUNEThe Federal Reserve to increase interest rates, according to a consensus.of major banks. Other national banks tipped to follow suit.
Forty-first G7 summit takes place in Germany.
JULYLegalisation of marijuana in Oregon state, US.Seventh BRICS summit, held in the Russian city o
AUGUSTLaunch of Microsoft Windows 10.
SEPTEMBERPope to visit the US.Launch of Apples iPhone 7.
OCTOBERArgentina holds presidential elections.Federal elections in Canada.
NOVEMBERParliamentary elections in Burma (Myanmar).First advert on the moon, as Pocari Sweat, a Japafrom the lunar surface with the aid of unmanned ro
UN Climate Change Conference to achieve legallyclimate change.
DECEMBERParliamentary elections to be held in Spain.Roaming charges for mobile phone users to be phDeadline for the Millennium Development Goals.
2015 WORLD EVENT CALENDAR