How purchasing managers, commodity managers , sourcing leaders are taking actions related to inflation and continued uncertainty.
Inflation is one of the important problem of all procurement professionals minds right now. US Inflation Rate is at 8.52%, compared to 9.06% last month and 5.37% last year. This is higher than the long term average of 3.26%. Euro area annual consumer inflation jumped to a new record high of 9.1% in August, according to a flash estimate from the EU’s statistical office on Wednesday. The figure was up from 8.9% in July, Eurostat data showed.
Inflation has forced purchasing managers, commodity managers , sourcing leaders to take action, What are these actions?
1.Finding new suppliers to lower costs
2. Establish price change mechanisms.
3.Renegotiating contracts with existing suppliers
4. Understand your major cost drivers like Direct material · Direct labour · Manufacturing overhead · General selling & administrative · Profit
Fighting against rising inflation is not an easy job. However, by creating risk management strategies and strong supplier relationships in place, procurement managers can minimize high Inflation rate risks.