From the April 2023 print issue
Now that spring has arrived and we’re into April, my family and I have started to think about and plan for summer holidays. Each year, we try to juggle a few different priorities in that area.
I have family in Yellowknife I’d like to visit. My wife’s family lives in Denmark, so we usually go there in the summer, as well. It would also be nice to rent a cottage for a week before our son starts grade six this coming September.
Yet inflation has driven up the cost of many goods and services – travel included – over the past few years. That has hit regular consumers like us and supply chain organizations alike.
Global supply constraints and pent-up consumer demand have conspired to push up prices. That annual inflation, at just 0.7 per cent in 2020, rose to 3.4 per cent in 2021 and even more last year. Happily, that number has dropped this year. In fact, it went from 8.1 per cent last summer to 5.2 per cent in February.
That’s good news. And according to a survey by Statistics Canada from earlier this year, fewer Canadian businesses are expecting supply chain challenges going forward. While those challenges will never completely evaporate, expectations related to supply chain challenges are improving. Overall, 40 per cent reported challenges had worsened since the beginning of 2023. That’s down significantly from 52 per cent in the fourth quarter of last year. That shows a reasonable improvement.
Still, expense management remains important, whether it’s among supply chain or procurement professionals, any of the several layers of Canadian government, or private citizens planning summer travel. While the desired outcome of value for money may be the same for all of the above, there may be no single, final path to get there. Curbing expenses can involve various strategies.
Supply chain organizations and procurement professionals must ask several questions. Do we need to buy certain items? Can we buy other items that are perhaps less expensive? Must we keep using all the services we’re currently using?
One piece of financial advice is to review your organization’s (or your own) spending patterns regularly. That helps to provide the visibility into spend that can be presented to internal stakeholders to share that visibility and provide them with a clear picture.
Having clear up-front goals, success metrics, and selection criteria can help to guide supplier decisions and rankings during negotiations. In other words, know what you’re spending and have goals that can help you reach a specific destination.
Hopefully, these are useful strategies not only for procurement and supply chain organizations, but also all of us as we deal with inflation and economic uncertainty over the course of the rest of the year.
Have any expense management advice? Drop me a note at [email protected].