Industry procurement managers report rise in business investment

Posted on 17 Dec 2014 by Jonny Williamson

As procurement professionals within UK manufacturing report an increase in business investment activity in 2014 and indicate such spending is likely to continue to increase in the year ahead, Office Depot’s Nigel Crunden asks, is this a cause for optimism?

According to the latest research by workplace solutions provider, Office Depot, 91% of procurement professionals in the manufacturing sector say that company spending on capital expenditure, which typically includes investment in plant, machinery or technology, has increased in the past year.

Of these, 83% said they had spent between 10% and 50% more than in the previous year. Even more optimistically, 92% of procurement managers in the manufacturing sector said they are expecting capital expenditure to increase in the year ahead – a sign that businesses are becoming more willing to invest in growth.

Nigel Crunden, Office Depot’s marketing manager, commented: “It is a really interesting time to take a snapshot of procurement dynamics in the manufacturing industry. Although the economic downturn has impacted on business confidence, spending on purchases that can deliver improved operational results or increase production capacity seems to be rising.

“However, there is still evidence of some caution when making purchasing decisions and the majority of procurement managers in the manufacturing sector (70%) tell us they are more influenced by price than quality, although more than one in ten consider both to be equally important.”

Other considerations are playing more of a role in the decision-making process, as cost pressures force buyers to further qualify that a supplier will deliver on its promise. 83% of respondents stated that they conduct in-depth online research into the quality and reputation of a supplier before placing an order.

He added: “Fact finding and desk research as to the competencies of a supplier have become firmly embedded in the culture of procurement processes in the manufacturing industry.”

Given that the bar has now been raised, in terms of the expectations placed on suppliers, the supply chain must now work even more closely together to support UK manufacturers as they grow, said Crunden, who concluded: “While an increase in business investment in the manufacturing sector is clearly apparent from this study, there is a firm focus on getting as much return on investment as possible.

“Suppliers can help to meet this challenge by fully engraining themselves in their customers’ business culture and designing product and service offerings that meet their needs. Customers can do their bit too by streamlining ordering and billing processes.”