About the Survey
By Staff -- Purchasing, 1/14/1999
This month, Purchasing Magazine rolls out its new monthly grassroots business survey. Think of it as a purchasing-specific version of the Federal Reserve's famous "Beige Book" survey tracking regional economic and supply conditions through the eyes of business executives.Each month, Purchasing's new survey will ask a panel of buyers around the country to comment on:
* Their latest impressions of business levels.
* Their company's inventory-to-sales ratios for materials, work-in-process, and finished goods.
* Any experiences they may have had with short supplies.
* Their business outlook for the coming six months.
* Their recent price, leadtime, and quality trend experiences for a host of specific commodity and finished goods categories.
* Specific price or leadtime changes occurring in the most recent month plus reasons for those changes.
* Their biggest buying headaches for the past month.
Reporting of survey results will focus on both national and regional trends. Most of the data will be reduced to an easy-to-interpret diffusion index format. A diffusion index is calculated by taking half the number reporting "same" plus all of the number reporting "up" or--in the case of desired inventory-sales ratios--"too high."
Rules of thumb for reading a diffusion index are as follows:
* A reading of 50 (or thereabout) indicates no significant trend.
* A reading below 50 indicates a declining trend.
* A reading above 50 indicates a rising trend.
* The greater the distance from 50, the stronger the trend.
Purchasing will track the index data in time series. After sufficient history is established--probably one year--Purchasing will also begin to report the data in time series. With hopes of pointing up both national and regional supply and inflation trends that may either lead or coincide with major macroeconomic changes.
An important caveat!
In the initial months, this new monthly survey will be mailed to a random sampling of Purchasing readers. Over the course of the next year, the goal is to sign up the greatest possible number of regular panelists, in equal numbers for the various regions, and with strong depth across the specific commodity segments tracked. To ease the burden of tabulation and to improve timeliness, Purchasing will also pilot an e-mail version.
The initial sample sizes are relatively small (especially for regional breakouts). Where n/a appears in the tables, there were no responses for the given commodity in that region. In a number of specific commodity cases (price and leadtime indexes), the index data reported in the table and in the text of the main story rely on small sample numbers.
In reporting this preliminary data, we are attempting to entice a large number of purchasing professionals to participate in the survey. The more participants, the more accurate the data will become. The more accurate the data, the more easily it can be used to formulate and support national buying and negotiating strategies and to spot general economic trends.
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