What I'm seeing among some purchasing and supply management professionals is bordering on a panicked reaction to commodity price levels. Paying closer attention that ever is advisable, but this is not the time to panic.
As the article suggests, there are things that you should be doing to contain costs. I also think that anyone struggling with inflation should assess their situation by asking these types of questions:
- Is the price increase proportional to what's going on in the market?
- Am I globalized enough in this category? (If you have realized cost savings in the past by moving your sources from domestic suppliers to global suppliers and you're experiencing inflation, that's one thing. If you've never explored a global sourcing strategy, that's another.)
- Could the market be peaking or is there no end in sight when examining the rationale for the inflationary effects?
When you look a year or more down the road, timing is everything. You might hedge like Southwest Airlines (historically good) or like Palisades School District (questionable, hat-tip to strategicsourceror.com).
Hindsight may be 20-20 for the average person. But, in today's challenging purchasing and supply management world, your foresight better be just as good.
To Your Career,
Charles Dominick, SPSM
President & Chief Procurement Officer
Next Level Purchasing, Inc.
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