Authored by Mickey North Rizza
Recently the International Air Transport
Association (IATA) made a bold prediction for 2013: Airlines
will earn global net profits of £5.17 billion despite volatile fuel prices
and weakening demand.
But like all predictions for 2013, it
will be interesting to see if and how, the global carriers meet the IATA’s
expectations. Oddly, the articles about this prediction fail to mention
procurement’s role in achieving these savings.
If you’re
still trying to understand why cost reductions have a bigger and faster impact
on the bottom line than driving top-line sales, here’s a simple explanation: a pound
saved goes directly to the bottom line, but a pound earned goes only to the
margin.
Procurement is naturally leaned on when
sales are harder to come by, and companies always revert back to ‘trimming the
fat’ when stuck in a cyclical, economic rut. Yet most of these procurement
teams will struggle to uphold their value when company growth begins to
multiply and organisational priorities shift. The best procurement teams,
however, are leaned on year after year, regardless of how well the economy is
performing.
If you’re not driving profits, valuation
and supporting corporate strategy, there’s a good chance that the procurement
team is missing the mark and missing a major opportunity to elevate your
position within the boardroom.
This is only one example of how
important cost-cutting and procurement– is to overall business strategy in
2013 (even if it’s not mentioned directly). Maybe by the end of 2013 we’ll see
more business articles with procurement in the headline.
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