adr international Procurement consultants

Predicting the unpredictable

Turbulent world conditions make looking into the future increasingly difficult. Robin Jackson rounds up some attempts to predict the unpredictable in the year ahead

Alan Greenspan, former chairman of the US Federal Reserve, said in 2002: “The use of a growing array of derivatives... means the financial system as a whole has become more stable.”

Occasionally politicians, economists and central bank governors get carried away. They say things that turn out to be radically wrong, or just plain stupid, and later wish they had kept quiet. Greenspan’s comment, in hindsight, must rank pretty high among things people wish they hadn’t said.

Now, in a very different world to that of 2002, politicians, economists and central bank governors are largely keeping their mouths shut. They tend to prefer a “wait and see” approach.

Unfortunately, though, procurement leaders can’t adopt the same non-strategy. We live in a massively unpredictable world and need to make the right procurement and sourcing decisions right now to  benefit our businesses and organisations in the future.

Rather than look into the crystal ball myself, I’ve identified 10 predictions for 2010 from established and reputable pundits that, if they turn out to be true, will impact the decisions procurement leaders will be making.

·  There will be a significant increase in the value of the US dollar against all major currencies (including sterling)

·  The exception being the Chinese yuan that it is predicted will increase in value by 5 per cent against the US dollar

·  The UK government will be unable to sell its gilts and will need funding from the IMF while the pound sterling will fall to 90 cents against the euro and near parity with the US dollar

·  To counter the growing threat of inflation, interest rates will increase in the major western economies

·  The BRIC nations will continue to grow rapidly

·  GDP growth in the developed world excluding the USA will flatten out and may again reverse in the second half of 2010

·  The oil price will fluctuate around the US $90 mark

·  Gold will fall to US $900 per oz and other metals will reduce in price too

·  Manchester City will win the Premiership         

·  New York Yankees will be bought by Jack Welch

OK, the last two are my own fantasies. But given the other predictions, procurement needs to carry out a risk assessment for each area to determine the likely impact for both your own sourcing activity and also establish and assess the risk facing your key suppliers.

Identifying the impact and the likelihood of the event taking place should enable you to prioritise your actions accordingly. Unfortunately, though, if the predictions turn out to be false you may be taking exactly the wrong action at the wrong time! It is imperative therefore, in such cases, that you have contingency plans in place to do a rapid about-turn.

Remember to try to stay focused though – as Einstein once said;   “Any man who can drive safely while kissing a pretty girl is simply not giving the kiss the attention it deserves.”

Robin Jackson is CEO of ADR International

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