- 77% of procurement and finance professionals expect a recession to hit in one to two years, and 30% said they are mostly or completely unprepared for one if it occurs, according to a survey of 104 procurement and finance pros from finance analytics firm Suplari.
- 82% of the companies represented in the survey are focusing on cost savings this fiscal year compared to 76% last year. The majority of respondents said they plan to reduce costs by scrutinizing office supply and travel spending, renegotiating contracts, consolidating vendors, implementing cost-saving technologies and delaying project expenditures.
- "Finance and procurement professionals ... are likely to be the first in their organizations to perceive and deal with the impact of a recession," Nikesh Parekh, co-founder and CEO at Suplari, said in a press release. The report encouraged procurement leaders to ready themselves for the potential downturn not only by reigning in costs but ensuring they are proactive about gaining visibility into their suppliers' stability and operational continuity risks across multiple tiers.
Despite a decade of sustained economic growth since the 2008 recession, analysts are increasingly worried that a tight employment market, credit market risks, trade uncertainty and other factors are pushing the economy toward a decline.
Respondents feared a recession would lead to budget cuts on procurement spending, layoffs in their departments and the loss of suppliers and contract partners.
To hedge against this, most procurement managers are setting savings goals of between 5%-14%, with potentially more cost-sensitive small and mid-size firms setting higher goals than their larger counterparts.
As procurement managers work to reduce spend, the report analyzed where that additional cash is going. 67% of respondents choose to reinvest in "longer-term and expansion projects," 61% put the funds into strengthening their bottom line and 52% focused on reinvesting within individual department budgets.
These priorities shifted somewhat depending on the size of the company, with 74% of large companies ($1 billion or more in revenue) preferring to reinvest in their bottom line and 64% of small companies (with revenues under $250 million) preferring to invest in specific departments.
While there is yet to be a definitive indicator that proves a recession is imminent, the report respondents stressed a "better to be safe than sorry" approach that they hope will ensure they come out on top.
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