According to EY, the UK has had the worst start to the year than since the global financial crisis a decade ago. The latest EY Profits Warning Report recorded 89 profit warnings - up by 22% from 73 - in the same period of 2018. With general retail representing the sector with the highest number of companies.
Pressures for retail procurement and finance teams to maintain margins is nothing new. For Chief Procurement Officers, already suffering from a lack of time and resource, pressures to adopt new digital technologies as well as regulatory and trading uncertainties through Brexit, may add more pressure that usual.
Combined with strong inflationary headwinds that contribute to price volatility in commodity markets impacting the costs of food ingredients, raw materials and packaging. In turn this means margins continue to be squeezed, making it harder than ever to achieve - and then sustain - improvements to the bottom line.
All of this reduces operational effectiveness and makes it harder for category buyers to deliver value for stakeholders and maximize margins through stronger negotiations with suppliers. So how do procurement teams tackle these issues?
Traditionally, procurement leaders, concentrate on three critical elements controlling costs, improving efficiency and managing risk to remain profitable and stay ahead of the competition.
With pressure on available resources, being able to reduce the time required to prepare and deliver effective price negotiations with suppliers, will help to ensure category buyers can source materials at the lowest cost.
By leveraging and applying price data, market insight and technology that can be integrated into existing business process and work flows, the benefits of standardisation and repeatability can be delivered across the entire team.
At the same time to protect the business from increasingly competitive environment procurement leaders need to embrace the right changes, to ensure they adopt new technology, tools and data to innovate and respond quickly to market-making trends.