Perfect Storm batters global business

Everywhere you turn at the minute, forecasts for the world economy in the next 12-24 months keep on getting progressively worse.

And while there is always a danger of the world simply talking itself into recession, what can't be denied is that the effect of a downturn, perceived or otherwise, is significantly compounded by rapidly rising commodity prices.

The Times reports that petrol prices are expected to reach more than £1.12 per litre next month as service stations feel the effects of the latest surge in global crude prices.

Manufacturers, particularly in the USA, are talking of a 'perfect storm' where the credit markets, tax calls, oil and raw material prices have all hit costs at one end of the business and driven down consumer spending power at the other end.

As a result we have already seen organisations focusing even more closely on procurement practices and the supply chain, as cost reduction becomes a seriously pressing issue across all direct and indirect spend categories.

There has been a noticeable upswing in what are effectively hedging events, with businesses running electronic sourcing events - typically eAuctions - with a view not necessarily to make big short-term savings, but to secure a price point for the kind of goods and services most affected by commodity price rises.

Recent examples include carrier bags and courier services, both highly sensitive to fluctuations in oil prices, as well as events that run straight to the heart of the matter to secure a price for the supply of millions of litres of diesel.

The key win here (on top of the real savings that were realised in every case) is a period of certainty in uncertain times. And that's simply priceless.