report for procurement

8/9/2019 Report for Procurement

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JANUARY2015

2015 Trend ReportA Reference Guide for Procurement


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www.procurementleaders.comJANUARY2015

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

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