The ongoing trade war between the US and China is posing new challenges for procurement professionals in the UK. Due to globalisation and competition, companies are trying to keep their prices low to attract more consumers. While the market is proving to be volatile for procurement professionals, they can use this opportunity to cement their position in the organisation and bring on a change in procurement.
Both the US and China are large consumers and exporters. However, the economic climate between two countries has turned hostile, with each slapping large tariffs on the other. While the US is trying to give impetus to its America First narrative that the incumbent US president used during his 2016 election campaign, China is trying to shore up its foreign exchange to make sure it has adequate reserves.
Due to the dispute between these two superpowers, manufacturers are facing rising costs, while the demand for products is gradually reducing. Manufacturer prices have increased not just in the US, but also in the EU since the current US administration took over the reins in 2017 after a period of decline from 2014. Experts believe that the decline was due to the replacement of low-skilled labour by modern machinery and automation.
Opportunities for procurement
Mexico, China and India have seen an influx of foreign investment in recent years and, as a result, these nations have increased their output while keeping costs down. Procurement professionals can turn to these nations to find cheaper resources and keep their supply chain intact.
While the trade war between China and the US will escalate or reach a stalemate, procurement professionals can look to emerging economies to source materials at a low cost so that they can still stay competitive in the market. Sourcing from developed nations can be expensive, and the uncertainty surrounding Brexit is also not helping producers and manufacturers in the UK. If procurement professionals can create alternative supply chains from reputable suppliers and vendors from nations outside the EU, it will help them tide over the price hike brought on by the dispute between China and the US and ensure a steady supply of high-quality raw materials. It will also allow organisations in the UK to tap newer markets, especially emerging markets, to expand their business.
If you are a procurement professional, now is a good time to create a plan for your organisation’s procurement needs, and this will also look good on your resume when you are ready to explore bigger and better job opportunities.
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