Buyers cautious on budget increases
By Brian Milligan -- Purchasing, 2/8/2001 2:00:00 AM
Purchasing departments are just about split when it comes to increasing their budget in the curious economic climate of 2001. About half say their budgets are up this year as they consider more travel, more personnel and general inflation. But the other half-a slim majority-say their budgets will not go up as they take on something of a bunker mentality.
Any optimism out there seems to be tempered with caution. Few departments say they face a downsizing this year. But even fewer say they'll add on more people in the shifting economy.
Those are the results from a recent PURCHASING Magazine survey. The results suggest that many purchasing departments out there are taking a conservative approach to spending in 2001 as they plod into the new, softer economy.
It's not that purchasing managers are predicting dire times. Some purchasing directors say their companies have high hopes for 2001, despite early warning flags that the economy is slowing.
"Sales were up in 2000, and we expect 2001 to be very close," says Cyndy Dabbelt, director of purchasing for the Missouri-based SCM Electronics.
But ask if budgets are increasing, and you'll get a close tally. Real close. Forty-six percent of those surveyed say their budgets will not increase in 2001. Forty-two percent, meanwhile, say their budgets are increasing this year.
Some of those who say their budgets are not going up say their companies invested in e-commerce tools in 2000. They readily expect those tools to help reduce costs as buyers seek lower costs in private and public online exchanges. These reduced cost predictions are negating a need for a major budget increase.
"Through the use of e-procurement tools, we will strive to offset higher demand of our time with increased effectiveness," says Charles Stroda, director of purchasing for the Pennsylvania-based Snyder's of Hanover.
No additional help
Others simply say their budgets are satisfactory to pay the department's salaries, and that they do not need to add on staff this year.
"No additional help is expected," says one buyer.
Some purchasing managers say their companies have made significant investments in other departments, leaving less left over for purchasing. Max Sewald, director of purchasing for the New Jersey-based G & W Laboratories Inc., says his budget will not increase this year "due to investment in R and D and new products."
Most of those who took part in the survey say they do not have plans to add on new staff members this year. Seventy-three percent of those polled say they will not hire new personnel, while only 24% of those who answered the question say they will.
New staff members
Those who say they will hire new personnel say regardless of a potential economic downturn, they need the new staff members now. Given a choice of using the in-house approach or turning to employment services, most-51%-plan to use in-house searches, referring to newspaper advertisements and in-house recruiters, to find new employees. A majority of those who answered the survey question, 55%, say they do not intend to turn to Internet job postings to find the new employees. Only 32% of those who answered the question say they will use the Internet for this purpose.
A minority of 35% who answered the question say they will turn to employment services to find new help.
Those who plan to increase their staffs say they need additional buyers and senior buyers, administrators, contract negotiators and transactions processors. They say they seek qualities like professionalism, good attitude, strong communication skills and forward thinking.
Many say they are looking for educated buyers who have experience in global purchasing, computers, e-commerce and management.
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