Jack Welch once noted that the only two departments that drive revenue directly to the bottom line are sales and procurement. He noted that the other departments were basically overhead. I would also include supply chain professionals in this revenue generating group.
The May ISM-New York Report on Business was released on June 4th at 9:45am Eastern and is available for download here.
The ISM-New York Report on Business (like the other ISM reports) is compiled as diffusion indices –we add the percent of positive responses to one-half of those responding that conditions remained the same. A reading of 50% means no change from the prior month, greater than 50% indicates a faster pace of activity, and less than 50% a slower rate. Each month is not so much a reading of the current level of activity as it is an indication of growth or contraction from the previous month.
A note specific to the New York Metro area, where all of this report’s respondants are located: they are predominantly in professional services industries. While I’m sure that does not come as a surprise, it is important to keep in mind when you think about the context for the trends being reported by these particular purchasing managers.
With that background, let’s transition to this month’s report.
These webinar notes are from a May 19th event sponsored by GEP and presented by the Hackett Group’s Kurt Albertson. If you are interested in viewing it on demand, GEP has it up on their site, accessible after a free registration.
This event was very ‘man-moment-machine’ in its approach to procurement’s current status and future potential. Albertson opened the event by talking about the facts that net margins have not returned to their pre-recessionary (2007/2008) levels and revenue growth is down. While this sounds like bad news and more bad news, it is really a confirmation that procurement’s search for something new is right on target. Companies as a whole are going to have to make changes in order to be successful going forward. Innovation and expanding into new markets have become the priorities as companies strive to improve their growth rates and potential.
For a very long time, procurement has been challenged with keeping costs down, finding a quality product or service at the best possible price. The impact to the bottom line was the critical measurement. And it still is, but there is more we can do!
This week’s trip to The Flip Side is brought to us through a webinar held last week by the TAS Group, a sales methodology and training company. The event was called “Maximizing Renewal Revenue – Continuing to Deliver Value to Earn the Renewal”. Just so we’re all on the same page, Renewal revenue is sales speak for what we consider awarding business to an incumbent supplier.