ICT Buyers Need to Shift More for Less Procurement Culture from Ad Hoc to Proactive

As natural disasters continue to impact on manufacture, supply and pricing, ICT buyers need to shift their ethos towards buying for today and tomorrow, says Mercato Solution's Head of Benchmarking, Al Nagar.

The business estimates that 70% of private and public sector IT buying for consumables, desktops and printers is conducted on a day to day demand or reactive basis. This is in the context of a highly volatile IT supply chain where price and stock change daily. When there is a requirement, the ICT buyer – who often multitasks as an IT manager or procurement champion - contacts suppliers, potentially benchmarks prices and makes a purchase.

However, the Japan Tsunami and Thailand floods have significantly impacted component and finished product delivery, shortages and ultimately price hikes. Hard Disk Drive shortages from the Thai floods are still being reported as impacting supply of lower end cheaper laptops, desktops and servers.

Nagar explains: "Buyers demanding such items reactively are having to settle for more expensive, higher end products where stock is available. So, natural disasters' impact has brought into sharp focus the acute underperformance of a reactive ad-hoc approach to buying."

"A lack of forward planning is impacting IT procurement budgets, yet this could be overcome as regular buy or larger one-off purchases can be forecast to a large degree."

"Now is the time for buyers to kick-start a longer term best practice strategy and forward plan buying to genuinely buy more for less whilst maintaining fulfilment of demand and therefore business continuity. The reactive view is costly and it must change."

Nagar offers some direction: "Buyers need to analyse average purchase volumes on key routine items and put in place monitoring facilities or alerts that enable them to watch stock and price levels."

"When stock or price move towards critical levels, the purchaser knows to act proactively and at the best price. In this way, purchasers can reduce risk and minimise costs and threat to business continuity."

Market research conducted using KnowledgeBus IT Edition, an IT price and stock benchmarking tool, has previously found that of 1,000 respondents 81% were not getting the IT deals they expected with margins as high as 474% unearthed.

"Price and stock in the supply chain change readily and natural disasters accentuate the challenge for time strapped multi-tasking ICT buyers trying to achieve best value on every purchase."

"Better planned and researched proactive buying is proven to yield greater compliance and more-for-less budget compared to ad-hoc, reactive and fragmented buying behaviour. Simple support structures exist to facilitate a proactive culture," concludes Nagar.


Release date: 15/02/2012

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