Wednesday 26th Oct 2016 - Logistics Manager

Strategic thinking needed at board level, says masai

The majority (80%) of purchasing managers are under increasing pressure from senior management to cut purchasing costs, according to new research from London-based consultant Masai. However, while nearly 90% agree that purchasing has become more of a board level topic in the past 12 month, concern remains among 10% of respondents that it is still “simply not viewed as a strategic issue”.

Darren Evans, Masai’s managing director, says: “A strategic approach must underpin purchasing if it is to realise its full potential. Tactics alone won’t do. Cutting costs without adhering to an underlying strategy can only ever be a short-term measure. This is evidenced by the fact that the UK manufacturing sector cannot consistently grow margins.

“Purchasing may have risen up the corporate agenda in the last year but there will be continued pressure on margins until UK PLC acknowledges that strategic purchasing can make the difference between making a profit or making a loss.”

Masai’s research also reveals that a quarter of companies do not currently source outside of the EU, with 46% of those businesses saying they will not consider doing so in the next 12 months either.

Evans comments: “Despite the clear opportunities presented by global sourcing, some companies remain unwilling to look at the options further afield, and want to confine themselves to the EU marketplace. The costs of purchased materials and components can represent up to 75% of a product’s selling price so it’s time for the board to start looking at the bigger picture.”