Yesterday, I posted a piece about how a hospital’s new purchasing policy hurt a local pizza shop’s sales. And that got me thinking…not only should a company’s senior management know what drives, and can impact, demand for its products, but that company’s procurement team should know that as well.
Consider another example…Campbell’s Soup today reported that its soup sales were up in the most recently completed quarter. An article on Yahoo Finance says that “soup sales were up as more people prepared their meals at home” likely due to the bad economy curtailing eating out budgets.
What about Ford’s August 2009 sales? According to an article in the Washington Post, Ford’s August vehicle sales were “up 17 percent compared to August of 2008, juiced by the government’s cash-for-clunkers program.”
Think about GameStop – a video game retailer – whose same store sales in the last quarter plummeted over 14% according to an article in the eCommerce Times. In that article, GameStop’s CEO is quoted as saying “due to the effects of the recession and strong prior year comparisons, the video game industry experienced a sharp decline in consumer spending during the quarter.”
All of these changes – both positive and negative – are a result of the shaky economic situation we’ve been in for the past year plus. Hopefully, each of these companies’ procurement teams anticipated the recession and adjusted their strategies appropriately.
But, as all recessions do, this one looks like it is coming to an end and various demand drivers (such as the now-concluded cash-for-clunkers program) will change as well. Does that mean that people will eat less soup? Will they buy fewer cars? Purchase more video games?
The procurement professionals at these companies need to know this. And you? You should know:
- What factors drive demand for your company’s products and/or services?
- If the economy recovers, how will that demand change?
- What strategies do you need to change in light of that anticipated change in demand?
Get your answers now. Then, next quarter or next year, you’ll be able to demonstrate how you’ve thought strategically and helped the company outperform its competitors in a time of change.
To Your Career,
Charles Dominick, SPSM
President & Chief Procurement Officer
Next Level Purchasing, Inc.
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