coLumNS
navigating Uncertainty
Corporate Purchasing Practices
ncertain times, for the foresee- balance sheets, so their available range of options
U
able future, are the ‘new nor- is very different. Asian companies must also expect
mal.’ In light of this fact, CEO’s that the global recovery is not going to be symmet-
will need to rethink their busi- rical so markets will need to be targeted systemati-
ness strategies, which are usually cally to secure additional poles of growth.
based on certain unchanging business assumptions While no one can predict what 2010 will bring,
or the “indisputables” that are driving growth. All the environment in which CEO’s are setting strat-
of these assumptions are being tested, but none egy has become more complex. Furthermore, the
more so than the answer to the question ‘how do rapid pace of economic events is challenging CEOs
consumers spend’. in their efforts to focus on the long term, and to
The balance on consumer demand is undeniably keep the organization and its processes well aligned
shifting. At a conference in Singapore on Novem- with shifting strategic priorities. The key to suc-
ber 11, Robert Zoellick, president of the World cess in this environment is ‘agility’. Driving agility
Bank, said that the role of U.S. consumers in the into their business requires CEO’s to balance long
David Henshall is founder of Pur-
world economy will stay term strategy with mar-
chasing Practic (www.purchasing-
low. “It’s hard to believe ket changes. So instead
practice.com), a niche consultancy
specializing in procurement. Con-
that US consumers will of preparing the budget
tact him at dhenshall@purchas-
play the role they played and then not changing it
ingpractice.com )
in past recoveries,” said much over the course of
Zoellick. “The US con- the year, companies must
sumer will be too distract- review priorities at least
ed by de-leveraging and quarterly and make the
rebuilding their savings.” necessary adjustments
More recently (and blunt- to balance the long term
ly), Lawrence Summers, outlook with shorter-
director of the White term flexibility.
House’s National Eco- The CPO can play a
nomic Council, said that key role when manag-
“there is no way our im- ing in uncertain times
port-led growth is going through:
to be the driving force for the rest of the world’s > Cost Management – by keeping cost down un-
export-led growth going forward.” Summers called til the “indisputables” have been tested.
for a “rebalancing” of the world economy in which > Market scanning - converting uncertainty into
Taking the
U.S. consumers play a less significant role. knowledge which managers can use to make strate-
For many Asian companies who have relied on gic adjustments and speedier decisions.
American
the US consumer an “indisputable” driver, taking > Risk management - to identify risk, quantify,
consumers
the Americans out of the game will have significant investigate causes, and manage and monitor its ef-
out of the
impact upon strategy. The real question in the ‘new fects.
normal’ is; how do you move from over-reliance > Collaborating with suppliers to drive innova- game will
on US consumer demand, to find better balanced tion that in turn drives growth.
significantly
multi-polarity growth? CPO’s must ensure that they maintain organiza-
tional alignment in order to keep on track. So if
impact the
Options strategy drives structure and structure drives pro-
strategy
Strategic options include developing new prod- cesses CPO’s must guarantee changes in corporate
ucts, new markets, mergers and acquisitions or a strategy are reflected in their structure and that
of Asian
combination of these. However, companies are their processes support where the CEO wants to Companies.
coming out of this recession with very different go strategically.
www.chainaonline.com JANUARY/FEBRUARY 2010 17
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