Tuesday, November 27, 2012

Does The Fiscal Cliff Threaten Procurement More Than Any Other Function?

Seems that the top headline on every newspaper and news website this month has been related to "The Fiscal Cliff" in the USA - a December 31, 2012 deadline upon which, absent a budget agreement by the party-divided US Congress - automatic spending cuts and tax increases will go into effect, sending the US economy into yet another recession.  Once again, this afternoon's headlines report "little progress" on resolving this matter.

If you're familiar with my teachings, you know that the members of Congress in opposing parties are using the deadline to see if the other side will "blink" and give in to their negotiating demands.  Usually, that is a good negotiating tactic.

However, the uncertainty of an outcome of these negotiations has effects beyond just the parties negotiating.  It has US businesses preparing for a worst-case scenario and "tightening their belts," really restricting expenditures to preserve cash.

In addition to restricting spending, informal evidence suggests that companies are beginning to lay off workers - perhaps just temporarily.  When deciding on whom to lay off, companies often look to departments that are operating under their capacity.

With non-essential expenditures being deferred or canceled, guess which department isn't quite as overwhelmingly busy as it was a month or so ago.

That's right...the procurement department!

Now, you and I know that procurement professionals do more with their workday than just place order after order.  But we can probably also agree that many C-level executives do not understand all of the intricacies of procurement beyond simply "buying stuff."

One may speculate that these factors may conspire to result in procurement headcount being threatened - albeit temporarily - by the fiscal cliff.  I won't claim to be an expert and say that it is for sure, so let me simply ask your opinion...

Do you think that procurement is threatened more by the fiscal cliff than any other function?

To Your Career,
Charles Dominick, SPSM, SPSM2
President & Chief Procurement Officer - Next Level Purchasing Association
Author - The Procurement Game Plan
Struggling To Have A Rewarding Purchasing Career?
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