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Supply Business
Formerly CPO Agenda
CIPS
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From the editor

Brand building

Summer 2009

 

As this issue of CPO Agenda goes to press, there are signs that the worst of the global recession may be over. To paraphrase an infamous quote from a former UK chancellor, we could be seeing the “green shoots of a recovery”.

 

So why the sudden optimism? The National Institute of Economic and Social Research suggested the British economy grew in April and May. Even the Organisation for Economic Co-operation and Development is sounding a little less pessimistic, with its composite leading indicators in June “pointing to a reduced rate of deterioration” for OECD member states. This cautious analysis concedes it is too early to conclude whether this is a temporary blip or a “durable turning point”, but after a year of negative headlines some positive indicators, however nascent, are good news.

 

Closer to our collective home, purchasing managers’ indicies from across the world are beginning to emerge from a sustained period of record lows. The figure for the UK services sector showed growth for the first time in a year in May.

 

Meanwhile, a composite PMI of 26 countries showed a slowdown in output’s decline for the fourth successive month in April, as the JPMorgan global manufacturing PMI recorded the biggest rise since 1998. Although the figure is nearly 18 per cent down on a year earlier, analysts at Markit, who compile the data, suggest the sector is recovering and quickly.

 

Well, that’s fine but it doesn’t feel any better, you may be thinking. And as the articles in this issue make clear, the effects of the downturn – the dearth of credit, factory closures, the durability of suppliers – are still with us. This is reflected in our survey of 131 CPOs on page 24. None of the key indicators suggests even a slowdown in the recession’s impact on procurement.

 

But if the worst of the economic troubles are behind us (at least in some parts of the world), how can we make sure the developments that purchasing has made during the downturn are sustained when it is over? Repeatedly I hear CPOs describe how its pressures have forced them to reflect on the nature of risk. “The traditional methods of risk are not working,” according to one. Particularly, they say it has brought into sharp focus the validity and timeliness of the market intelligence on suppliers’ financial performance, viability and creditworthiness.

 

This has forced many organisations to develop their own systems to assess risk and fill in the gaps left by traditional methods. And these systems will continue to deliver value for CPOs and their organisations, whatever the economic outlook.

 

Lastly, you will have noticed this letter comes from a new editor. I look forward to communicating with CPO Agenda readers as frequently and vigorously as I do with the readers of our sister magazine, Supply Management

 

 

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