Procurement professionals confirm the investment in enabling IT is not creating enough value – and not in balance with the need for on-going skills development.

105 Consulting Perspectives
We set out on this survey with the intention of assessing the trade-off between systems and skills in Procurement, and did not find what we had expected! The combination of tough economic times, requiring business functions to be evermore effective, and the history of systems investment that has taken place over the past five or more years, intuitively indicated that many organisations would be leveraging their technology investment, and operating at a less tactical level than before.

Why might we have expected that outcome? Three simple reasons.

1. The basic expectation that systems improve efficiency, and enable better performance;
2. Systems help ensure consistent and compliant adherence to processes and policies;
3.  The data captured by systems provides more accurate information with which to make better decisions for the future.

Rather surprisingly we appear to have stumbled upon an area where the deployment of systems is much more ad hoc than we expected; the value they add to the enterprise is regarded with more scepticism than we would have predicted; and the up-skilling that we thought would have been made possible by the existence of enabling technology, is not widespread. The bulk of the value from the technology deployed appears aligned to improving transactional efficiency and compliance. We are intrigued that only a minority of respondents felt the technology supports them on their strategic procurement agenda. This perhaps supports our view of the need to build improved procurement capability through skills development, in parallel with technology.

Read more in the full report. Download here.

Bellway has reported a 50% increase in pre tax profit for the year ending July 31 2011, returning £67.2 million on turnover up 15% to £886.1 million.

The firm sold 4,922 homes up from 4,595 and achieved an average selling price of £175,613 (£163,175).

Chairman Howard Dawe said: “The Group’s average weekly reservation rate rose during the early part of 2011 and did not fall until the summer months – a typical pattern for a normal housing market. Reservations in the first nine weeks of the new financial year are almost 11% ahead of the same period last year.”

Analysis: Most housebuilders are publishing positive results with increases in turnover and profit now that their businesses have been slashed in size and the remaining offices are operating at full capacity. By way of example, the new turnover figure for Bellway is only half the figure posted for 2007. Nevertheless, solid improvements in financial performance will sure up confidence and encourage expansion plans.

Gentoo Group has been granted approval for a new home purchase plan which will allow first time buyers and people renting long-term to buy a home without needing a deposit or mortgage.

The plan, named Genie – approved by the Financial Services Authority (FSA) – lets buyers acquire an increasing share in their property over a 25-year period. The purchaser will have the same rights as a traditional home owner and will pay a monthly residency fee, adjusted every five years, Gentoo explained.

Buyers can opt out of Genie at any stage and sell their accumulated shares back to Gentoo. Alternatively, they can put the property on the open market.

Following a successful pilot in May 2010, Genie will initially be rolled out across North East England, but Gentoo plans to take the home plan nationwide.

“Genie has been in development for two years and we genuinely believe that our home plan addresses one of the major housing issues of our generation,” said Peter Walls, Gentoo Group’s chief executive.

Analysis: This is a variation on the split equity model widely available through housebuilders and Housing Associations nationwide with monthly payments buying a share in equity and also paying rent. It offers greater flexibility in allowing the purchaser the opportunity to increase their payments to buy a 100% stake which they can sell on the open market and has the advantage over traditional mortgage products that it requires only a small set up fee rather than a substantial deposit. It will be interesting to see how comfortable the house purchasing community will be with a new and relatively complex way of buying property and if Gentoo are successful in raising the finance to roll this out on a substantial scale.

House purchase lending enjoyed a rise in August, according to figures from the Council of Mortgage Lenders released today (October 11).

In August, there were 52,000 loans advanced at a value of £7.9 billion, up from 48,700 (worth £7.2 billion) in July.  In August 2010 51,000 house purchase loans were advanced at the value of £7.7 billion.

CML said that lending to both first time buyers and home movers (the two groups make up the home loan total) was at its highest for more than a year. Loans to first time buyers rose 5% both from July 2011 and August 2010. The value increased 4% on July 2011 and 9% on August 2010. Loans to home movers rose 8% (10% by value) on July 2011 and 1% (2% by value) from August 2010.

Director general of the CML Paul Smee said: “Even though it is impossible to ignore the knocks to confidence emanating from the Eurozone, August lending showed welcome signs of life.

Analysis: A positive story which is not easy to attribute to anything happening in the real economy. However, anecdotally, Sales Directors are saying it is getting slightly easier to get mortgage approvals for customers with lenders showing a hint of flexibility. Also, financial advisors are reporting a steady increase in the number of mortgage products on the market which will be creating some competition amongst lenders to secure business.

House prices dipped 0.5% in September, Halifax’s latest data has shown.

The average price of a UK home is now £161,132. Prices in Q3 were 0.1% higher than in Q2, the first quarterly rise since Q1 2010. Prices in the three months to September were 2.3% lower against the same period last year.

Housing economist Martin Ellis said that house prices had been a “mixed monthly picture” throughout 2011 and reflected a market where prices were “lacking genuine direction”.

Ellis commented: “Greater uncertainty about economic and personal financial circumstances, together with pressure on householders’ finances from weak earnings growth, higher inflation and increases in taxes, are likely to be constraining housing demand.”

However, he added that low interest rates and rising employment over the past year had been supporting the market. “We expect little change over the remainder of this year.”

Analysis: In short we have the basic economic conditions of low demand (with mortgage finance restrictions, inflation and economic uncertainty being the key factors) and low supply (housebuilders producing half the volumes of 2007 and second hand sellers reluctant to come to market) leading to a steady price. However, the longer prices remain stable the greater confidence the mortgage lenders will have in offering higher Loan to Value products and therefore give first time buyers greater access to the property market.

Edbury Daley Viewpoint: The culmination of all the current housebuilding news is a stable recruitment market operating at relatively low levels. Sales positions dominate the recruitment instructions from negotiator through to regional department heads as housebuilders need the very best sales people in the prevailing market conditions. Greater mortgage finance would be the key to rapid housebuilder expansion and a potential glut of job vacancies across the disciplines.

Simon Edbury is a specialist in the UK housebuilding job market.

Good market conditions all round for procurement professionals

Recruitment activity remained strong despite the summer holidays

Is there a skills shortage in procurement?

This time last year we reported a noticeable improvement in job market conditions for the procurement profession and associated areas including SRM, P2P and e Sourcing. As regular readers of this analysis will know, we have observed positive trends in both the interim and procurement markets throughout this year.

Furthermore we have evidence from senior HR figures that procurement departments have more success gaining approval for new recruits than other functions in organisations with head count restrictions. This is undoubtedly due to the benefits that strategic procurement brings to major organisations and the recognition of this at board level.

Category & Sector Trends

Salaries for Marketing category specialists appear to have stabilised. This is an area that has traditionally had a premium on category expertise in the last 10-15 years but has been quiet throughout the economic difficulties of the last 2-3 years and this does appear to have impacted upon salaries.

The demand for IT category expertise continues to grow and we are seeing some shortages for strong candidates with expertise in telecoms and software.  We anticipate some salary growth in this area in the next 6 months.

Expertise in the classic areas of indirect spend remain in strong demand and we’ve been particularly active sourcing candidates with deep category knowledge in Marketing, HR, CapEx, Facilities & Property. Basic salaries for Category Lead roles can vary from £40k to £85k depending on regional and industry variations.

The FMCG sector is particularly busy with our specialist Hannah Jackson constantly sourcing the best talent in the sector. As usual the key category areas are ingredients, raw materials and packaging but we have also seen an increase in demand for new product development and logistics focused roles.

The Consulting sector, often a useful barometer for the health of the market, is very active in both strategic transformation projects and the more savings delivery orientated engagements leading to a healthy recruitment market which is up by 17% in the last 12 months based on our activity in the sector.

As mentioned earlier this year the gradual recovery in the interim market continues and there is noticeably less interim resource available currently.   Upward pressure on day rates is growing as a result and we envisage 2012 will see a strong interim market.

Candidates unable to gain roles on a day rate basis have the option to consider fixed term contracts which have become increasingly popular in the past 12 months as they represent a cost effective method to employ temporary staff for those organisations with head count issues.

Skills Shortage?

We have commented in the past about a scarcity of strong candidates in certain key areas of the profession.  Interestingly Supply Management have recently published an article looking at the findings of a survey by Accenture and focus on the question of whether a talent shortage exists.  Supply Management – Talent shortage

The Accenture report raises a range of interesting points impacting upon the profession and covers there findings on the subject of attracting and retaining the best talent.  In their survey Accenture report that only 41% of the most advanced procurement departments have a formal career opportunity programme to help attract, retain and develop their best people.  This figure falls to 5% in organisations where procurement isn’t as well established. The full Accenture report can be read here

Our view remains that there is real competition for the very best procurement talent and these are the key areas that even the leading functions can find it hard to identify the skills and experience they need:

Ambitious graduates with 2-5 years experience in procurement. Basic salaries range from £25k to £40k at this level.

Category Managers with highly valued transferable skills, stakeholder engagement usually being top of the list for most hiring managers.

Experienced functional leaders who can demonstrate a track record of delivering a step change in procurement’s capability and influence across large corporate organisations

P2P & e Sourcing specialists with experience in driving greater compliance and developing systems which require greater use of recent technology

Experienced candidates with the ability to adapt to different corporate structures and reporting lines e.g. matrix based environments present particular challenges

What are we doing to address this for our clients?

We work closely with key clients to help them refine how they can improve their recruitment processes and improve their ability to attract the people they need.

We advise on prevailing market conditions for every relevant niche area we operate in enabling clients to understand the availability and cost of the skills they need at any given time.

Chris McGowan is specifically responsible for identifying the very best of the emerging talent in the profession and closely monitors the progress of those on the leading graduate schemes.  We know which organisations have a track record of producing the procurement leaders of the future.

Andrew Daley maintains regular contact with a wide range of experienced leaders with experience as Procurement Directors and equivalent.

Hannah Jackson continues to work exclusively in the FMCG sector and has an outstanding network of professionals with both industry sector expertise and relevant transferable skills from associated areas.

The team works together closely to enhance our ability to find the best talent at all levels, particularly in areas well suited to transferable skills like Category Management and Vendor Management.

Through our extensive networking and advanced research techniques, each of our team is constantly striving to identify strong candidates in the less obvious areas missed by other recruiters.

Summary

The permanent market is in a healthy state with opportunities available at all levels from graduate to CPO in the last quarter whilst the interim market is edging towards full capacity again resulting in some improvement in day rates.

As the market continues to improve we believe the existing issues around skills shortages in key areas will only be exacerbated as demand grows, particularly at middle management level whilst the growth in supply is clearly constrained.

If you would like to discuss any aspect of the points raised here, or how to identify the talent you need for your team, please contact Andrew Daley on 0161 776 4603 or via andrew@edburydaley.com

If you are looking for a new role please contact Chris McGowan chris@edburydaley.com or David Ryan david@edburydaley.com

Anyone wishing to discuss opportunities in the FMCG sector should contact Hannah Jackson on 0161 776 4608 or via hannah@edburydaley.com

Is the CPO market about to come alive?

The battle for the best talent is on again!

Was the market slowed by the end of the financial year?

The trends we observed back in our Q1 Update have largely continued with the market conditions for procurement staff remaining amongst the best for any profession.

Our observations are as follows:

The permanent market is still busy, particularly at mid level e.g. Category Leadership & Sourcing Manager roles.  Salaries are creeping up again after a flat period and there is definitely competition for the best talent in the busiest parts of the market.  This is great news for both job seekers and of course the recruiters.

After a stagnant period at the most senior end of the procurement market we have been encouraged to hear of some recent appointments at CPO level combined with strong rumours of some imminent high profile moves.

This is potentially very good news as movement at the top end of the market tends to filter down into a busier recruitment market generally, and after a slower period this is really encouraging for those who feel there career progression has been slowed by the recession.

There has already been some movement at “Head of Procurement” level in various parts of the private sector, particularly with small to medium size sourcing functions and most notably in the FMCG sector.   Again this is long overdue and very much welcomed by all those with an interest in the market.

There continues to be a healthy demand for the brightest young talent, particularly those with geographical mobility.  This is attracting ambitious career focused people and Chris McGowan has been particularly active identifying the cream of the “graduate plus 2-6 years experience” pool for some of our key clients.

We are currently seeing greater demand for indirect spend expertise than direct, even in some of our more traditional manufacturing clients.

Packaging & Ingredients remain the busiest areas of direct spend requirements for Hannah Jackson in the FMCG sector, but she has also observed an increase in indirect spend related roles since her return from maternity leave.  Hannah has also noted that the Leisure sector is finally coming to life after a particularly slow couple of years.

There are more Technology, Events, Marketing and Travel focused Category roles available than has been the case for some time.  These areas are currently busier than other indirect spend categories like HR and Facilities which were strong last year.

We are seeing plenty of evidence that Technology spending continues to recover but most of the category specific roles in this area are on a permanent rather than interim basis.   So there is real competition for the best full time staff but interim rates have yet to recover and there are still plenty of good contractors looking for their next assignment.

Last year we reported an influx of public sector candidates onto the market.  This has slowed significantly in 2011.

The increase in P2P and Compliance roles that we noted last year has been sustained but there has not been as much activity in SRM and Vendor Management as there was in 2010. This is down by nearly 25%.

An exception to the generally positive theme is that there was a quieter period in late March and April where the market slowed noticeably.  A number of hiring managers we spoke to suggested this was principally due to the end of the financial year and associated budgetary constraints.

There was certainly some evidence that recruitment processes slowed in the run up to this period and it was compounded by the Easter holidays being closely followed by the Royal Wedding.  This prompted a number of people to take time off in between the bank holidays which also caused delays to recruitment processes.

Day rates and interim margins are yet to recover to pre recession levels but there is evidence that there is less downward pressure on rates and margins than there has been.  It will be interesting to see when day rates really start to recover.  We doubt there will be significant improvement this year.

There has been a noticeable increase in demand for experienced Consultants from a broad range of different Advisory businesses, whether they are delivery focused procurement roles with niche players or supply chain strategies and systems roles with the international consulting businesses.  This had been anticipated since early last year and is now happening across the sector.

There appears to be a little more freedom on salaries than has been the case for the last couple of years with some businesses more willing to flex budgets to attract the best talent.  We still have some way to go for this to be the norm as it was 2-3 years ago but again this is another sign that market conditions, particularly in terms of salaries and competition for the best talent, are returning to pre recession characteristics.

So in summary we would say that the underlying market trends are positive, building on the upturn experienced in the last nine months, but we estimate that the slower period we describe above reduced activity by up to 15% over the period in question.

We welcome your comments or feedback on any of the issues raised in this article.  You can post them here http://www.edburydaley.com/wp/category/news/

If you would like advice on identifying the best available procurement talent for your organisation please contact Andrew Daley on 0161 776 4603 or via andrew@edburydaley.com

If you are looking for a new role in procurement please contact Chris McGowan on 0161 776 4605 or via chris@edburydaley.com

Hannah Jackson who specialises in FMCG & Leisure can be contacted on 0161 776 4608 or through Hannah@edburydaley.com

In January 2008 someone turned the lights off.

There had been rumours during 2007 that housebuilding sales were slowing up but after ten years of boom it was hard to take them seriously. But by spring the following year national housebuilders were closing regional offices and make redundancies on a mass scale. Eighteen months later most residential developers only employed between 30% and 50% of their pre recession workforce. Thousands of experienced professionals had been laid off. Many will never return to the industry but what about those who want to recommence their career in residential development? If this sounds like you, here is an action plan to make the most of the job opportunities in the market today.

First of all there is some good news. There are more jobs in the UK housing market now than there have been for three years. The slash and burn approach to staffing overhead seems to be over. There is little growth in housebuilding and sales rates are not materially higher in 2011 than they were in 2010 but, and this is the crucial point, builders are prepared to recruit in order to replace leavers. UK based new homes developers have spent the past two years restructuring their businesses to be profitable on roughly half the volumes they operated on in 2007. For most, they have arrived at that point and do not want their businesses to contract anymore so when someone leaves they recruit a replacement.

So now we have established there are jobs to pursue, how do you go about it?

First of all get your CV up to date. Don’t wait for a job to come up and then start the CV. Be in a position to react quickly. There is a lot of literature available regarding the style and science of CV writing but don’t get lost in the nuances of it. A good CV in housebuilding is no more than three pages of A4 with a clear chronology of work history and any relevant qualifications and training. Concentrate on the last ten years of your work history and highlight successes and achievements in each position and support with evidence. Be wary of simply replicating your job description as this tells the reader what you were supposed to achieve not what you actually achieved.

So now the CV is ready, you need to find job opportunities to apply to. There are four main sources of housebuilding jobs as follows:

1. Traditional media advertising: You will find housebuilding jobs advertised in Housebuilder, Showhouse, Building, Estates Gazette, and occasionally in regional newspapers. The recruitment pages of the industry journals have dwindled significantly over the years but it remains a viable source of jobs.

2. Online advertising: Building and Estates Gazette have both developed an online presence for careers as an extension of their traditional recruitment advertising. In addition two specialist housebuilding job boards have been created: careersinhousebuilding.co.uk and housebuildingcareers.co.uk.

Uniquely www.careersinhousebuilding.co.uk only features jobs directly advertised by developers rather than recruitment agencies.

You will also find housebuilding jobs on generalist job boards such as Reed and Monster. The downside of the generalist sites is that, due to their huge scope, it can be difficult to find what you are looking for in amongst the hundreds of other industries and sub sectors.  If housebuilding follows industries such as accountancy and IT expect online job advertising to expand massively over the next few years.

Social Media: In such a competitive construction job market its worth considering every possible advantage over other candidates.  Time is often a factor for recruiting builders so get your application in quickly. One way to keep up to date with the latest online jobs is through social media like Facebook, Linked In & Twitter as they are usually updated regularly.   You can follow the online housing job boards here http://twitter.com/HousingCareers http://twitter.com/#!/housebuildjobs or join the Facebook page here http://www.facebook.com/pages/Careers-in-HouseBuilding/309948313624

3. Recruitment Consultants: Before the recession, they were probably calling you about positions they were working on. Now it is up to you to be proactive and make yourself known to them. Make a phone call to find out which consultant is the most appropriate one to speak to you for your region and particular discipline. Speak to that person and email a copy of your CV. Aim to cultivate a reciprocal relationship whereby you share contacts and news from the industry with them and in return you can expect to gain knowledge on current and forthcoming job vacancies. You are much more likely to have a positive impact than simply phoning around the recruitment consultants once a month to ask if they have any jobs to put your CV forward to.

The key players include PSD Group, Thomas Gray Assoc,  www.edburydaley.com, SPR Search & Selection and Potensis.

Temporary job market:  There are some temporary and interim jobs in the housebuilding sector but not as many as you might find in other areas such as IT. However one area that has a thriving temporary recruitment market is that of site based Sales Negotiators as builders strive to maintain their sales force.

Temporary sales jobs can be anything from a day to 6 months and can offer some flexibility around how often you work.  Developers often need short term cover for holidays and sickness, or to cover whilst they recruit permanent staff.

Amongst the key players in the recruitment of sales staff are Maitland Selwyn , Fusion People, Team Sales and www.zed-sales.co.uk It’s important that you find the right agency for you because each of these businesses have there own regional strengths and weaknesses, supply different builders and pay different rates.

4. Networking: This has always been a helpful strategy in any industry but is particularly effective in the tight knit community of residential development. If you think networking means trying to make new contacts at industry functions, think again. You can start from the comfort of your PC by creating a profile on UK House building job updates from Linked in

It is free to use and is gaining real traction in the housing construction community. You can link to people you already know and then see who they know and develop your network that way. You can also get the latest updates on jobs by joining the Careers in housebuilding networking group.

However, don’t forget personal contact either by phone or face to face. You need to make the effort to stay in touch with former colleagues because they are your route to the industry grapevine and plenty of vacancies are filled without ever reaching the open job market.

So your have efforts have been rewarded with an interview? To make the most of it simply get the basics right. Is your personal presentation impeccable? Have you been on the company website to get some company information? Have you visited a site to see the product for yourself? Is there any background information online about the person you will be meeting? You need to score four out of four here or you will be at a disadvantage to the other candidates and in the current climate the other candidates will be strong and numerous.

So, to conclude, here are some general tips on your overall approach. Be positive and proactive. The more avenues you pursue the greater the chance of you finding employment. Having a clear plan of action encompassing all or some of the points above will give your job search organisation and impetus. Be pragmatic by taking part time or temporary work. Apart from providing some income it will get you closer to the grapevine and increases your chance of finding a more desirable position. It also demonstrates to any future employers that you were prepared to make the most of opportunities available at the time.

Simon Edbury is a specialist in new homes jobs

He and Andrew Daley regularly produce information relating to the UK house building job market

Figures released from www.careersinhousebuilding.co.uk today provide evidence that the housebuilding job market is beginning to recover as residential developers expand production on new sites.

The new homes industry was hit harder than most in the recession as many leading builders suffered large financial losses and were forced to drastically cut both staff and production.

Having restructured in order to create much leaner operations in the last 2-3 yrs the major builders are now able to be profitable on smaller production volumes. Furthermore when key staff leave, builders now want to replace them rather than seeing it as another reduction in overhead and these factors appear to have stimulated the new homes job market.

www.careersinhousebuilding.co.uk only features jobs with builders in the new homes sector and advertisers in the past 12 months have included Taylor Wimpey , Persimmon Homes, Barratt Developments, David Wilson Homes, Redrow Homes, Miller Homes and McCarthy & Stone.

Their figures make for encouraging reading:

Site traffic increased by 106% in the 3 months leading up to Feb 2011

47% of all traffic were new visitors to the site

65% of roles advertised were site based e.g. Site Managers

45% of all vacancies advertised are for new homes sales roles

Specialist housebuilding recruiters www.edburydaley.com are the people behind www.careersinhousebuilding.co.uk

With many years of experience in the housing job market, they understood that the new homes builders were reluctant to pay recruitment fees and therefore needed a low cost advertising option.  They noted the lack of a reliable online job board specifically dedicated to the needs of the housebuilders where employers could target candidates with experience in the new homes industry.

Director Andrew Daley commented “It will take some time before the market is really strong again but we are seeing evidence of the recovery through our advertising patterns. As more and more builders discover the value the site delivers we are confident that we can play a major part in helping the industry grow to be a major employer again without stretching their recruitment budgets.”

The early signs for this year’s procurement recruitment market are very encouraging as we are currently experiencing our busiest January for several years, with this coming on the back of a very strong Q4 last year.

In fact we were very surprised by the figures announced earlier this week indicating that Q4 saw a 0.5% contraction in the economy.  During this period, the demand for procurement staff was as strong as at any time since mid 2008 levels.

Here’s a summary of our observations on the current market trends:

Recruitment activity for procurement staff across almost all areas of private sector is up significantly on the same period last year, particularly in the Electronics, IT, FMCG, Business services and Consultancy markets.

Using our own data, we have observed the resurgence of the permanent recruitment market with a 127% increase in activity between Q4 2009 and Q4 2010.   This is in part due to an increase in business confidence and less pressure on head count.

Demand for accomplished category specialists in key areas of indirect spend like Marketing, Professional Services, IT, Telco, Facilities and Travel is strong, particularly for those who offer the vital combination of stakeholder engagement and change management expertise.

Many Procurement & Supply Chain Consultancies are actively recruiting into their consulting force.  In recruitment terms this is generally viewed as a good sign of an increase in activity and spending within target client organisations, also stimulating demand for the very best candidates.

Fortunately the market is characterised by a large number of excellent people looking for new roles, particularly those who have stayed in the same role during the recession but are now looking for their next career move.

This is also boosted by the availability of many people in the public sector who are concerned about their futures. However there is very little evidence of private sector companies recruiting public sector Buyers in any significant numbers so far.

After a lengthy period of relative stagnation, moves at the senior end of the market are starting to become more regular now. It will be very interesting to see when the CPO market really takes off but we anticipate it being at some stage later this year.  We’ll keep you updated on this next quarter.

The availability of interim candidates is markedly down since the middle of 2009.   In our opinion that particular niche market has now genuinely recovered, and we have already seen evidence of day rates starting to creep back up this year.

There is a noticeable increase in competition for “up & coming” procurement professionals. Such people are often graduates with 3-6 years professional experience and are perceived as being relatively inexpensive by CPO’s given the range of modern procurement skills they can offer.

At Edbury Daley we are specifically working to identify the best emerging talent in the profession. If you are a looking for that next step in your career please talk to Chris McGowan (chris@edburydaley.com 0161 776 4605) about the roles we are working on at present.

Good news for all involved in the FMCG market, Hannah Jackson will be returning from maternity leave on 1^st March. If you are seeking a new role in the sector or need to add new talent to your team, particularly in core categories like Packaging, Ingredients or Raw Materials then you can contact Hannah now via hannah@edburydaley.com

Procurement Systems & Skills Survey – are we in balance? Our latest research topic is still available online.  We’ve already had some very interesting contributions and would really welcome your input before we start our analysis. You contribute to our research here http://www.edburydaley.com/wp/category/surveys/ and also access our research archive which is increasingly popular.

Having difficultly finding the talent you need for your procurement team? Are you facing some of the challenges we have touched on in this market report? If so please call Andrew Daley on 0161 776 4603 to discuss how we can help, or contact him via andrew@edburydaley.com

Q4 Procurement Market Update

With Christmas fast approaching it’s time for us to review the current market conditions for procurement professionals and how they’ve evolved in the latter part of the year, particularly with an eye on the traditionally busy period for recruiters in the New Year.

So what have we observed in recent weeks?

The post election lull appears to be over as we have seen much improved market conditions since September.

There has been a significant increase in the number of permanent and interim vacancies in the private sector, particularly in the Banking, Financial Services, FMCG, IT services, Consultancy and Technology sectors.

One of the most noticeable differences is the renewed appetite to make appointments as swiftly as possible. This has replaced the internal delays, additional rounds of interviews and senior management approval that have characterised the previous 18 months.

For example we recently completed a key appointment for one of our clients within two weeks of instruction.  This would have been unheard of last year when recruitment processes were typically taking 8-12 weeks.

The interim market still has pressure on both day rates and margins although some would say it’s a natural correction in what was a particularly buoyant market.  It’s not uncommon for an experienced interim manager to have reduced their day rate from £600-£700 to £400-£500 in the last 18 months.

We anticipate that interim rates will creep up slowly next year but it will be very interesting to see how long it takes day rates to recover to pre recession levels. We believe it will be 2012 before we reach those levels again.

Fixed term contracts are now increasingly common as this is clearly a less expensive way of employing temporary labour than paying day rates. With the pressure on day rates these contracts are now becoming more attractive to contractors and those who have been made redundant from permanent positions.

Not surprisingly given the government spending cuts, experienced public sector candidates are coming to us in large numbers seeking new roles.  We question whether the private sector will be able to “take up the slack” given the volume of people at risk, and the reluctance of many private sector organisations to consider people with long term public sector service. This is obviously a bigger question for the whole economy which goes beyond procurement and we are observing the market trends with some interest.

There has been a noticeable increase in demand for well educated, ambitious junior candidates in procurement and analyst roles recently. We believe this is due partially to the relatively low cost of employing such people, but also reflects the need to develop new talent, particularly in certain categories.

The supply of ambitious dynamic graduates for example remains limited but is significantly improved from as recently as three years ago.  We expect to see some salary increases in this area next year as demand outstrips supply.

Supplier Relationship Management – whilst there has been significant evidence of many leading organisations improving the SRM capability during 2010, this has yet to result in large scale recruitment.  A number of our clients are still focusing on developing robust SRM policies and frameworks before adding to the team, but we anticipate this will be a busy area next year.

The restraint on pay rises and basic salary offers appears to be loosening as salaries and bonuses begin to creep up as many major organisations move to keep their best staff and feel more bullish about future profitability.

Category trends:

We have also observed some interesting trends in terms of category specific roles which may point to some broader improvement in economic activity. For example:

There has been an increase in technology focused category roles in recent weeks and the message from several of our clients is that people are investing in IT again after reduced spending last year.

This has also been noticeable increase in travel focussed roles suggesting that companies are letting their employees travel more again, although there is also evidence that some of this is driven by the need for greater compliance, use of e tools and to control spend more effectively overall.

Direct spend – our clients in FMCG and technology related manufacturing are recruiting more than has been the case for the last 18 months and we believe this is due the general improvement in economic activity.   However there is also evidence that companies are reacting to some challenging situations in various commodity markets by improving their procurement capability in key areas.

Outlook for 2011

Like everyone else we sincerely hope that the improvement in market conditions will continue in the New Year.  The overall trend in 2010 has been positive in comparison to 2009 despite the impact of the election in the early summer and the issues around public sector spending.

A number of factors mentioned above give us cause for optimism and this is shared by some of our Management Consulting clients who are seeing increased activity and a willingness to commit to major projects from their clients.   So in summary there appears to be a greater willingness to commit budgets to effect positive change or strengthen the procurement capability, whether it is through better processes etc or increasing the size of the team.

Our research

As you may be aware we have commissioned the follow up to our research into “The growing importance of SRM” with a new online survey entitled “Procurement Systems & Skills – are we in balance?”

Our observation is that we are seeing an increasing reliance on standardised tools, technology and systems in the sourcing and negotiation process. Any benefits these can bring in the areas of cost effectiveness, consistency, speed, and the creation of audit trails, are obviously good news.

So our question is whether the widespread use of such technology and systems is creating a generation of procurement professionals who lack some of the critical skills that are required for full commercial competency and agility?  This survey explores the link between systems and core skills.

We would be very grateful if you find 10 minutes to contribute here: http://www.edburydaley.com/wp/2010/09/16/procurement-systems-skills-%E2%80%93-are-we-in-balance/

The results will be published in the latter part of Q1 next year so the questions will be available to complete over the Xmas and New Year period.

EdburyDaley

EdburyDaley is an executive recruitment consultancy specialising in Procurement and Supplier Relationship Management appointments on both an interim and permanent basis. If you are seeking a new role please call Chris McGowan on 0161 776 4605.  If you require assistance with identifying the talent you need for your team then please call Andrew Daley (0161 776 4603) to discuss how we can help your business.  Hannah Jackson will be back from maternity leave early in the New Year.

In our most recent report into the market conditions for procurement professionals published in March we observed the following trends:

A much improved market for permanent roles

A more stable interim market than 2009

The return of the “battle for procurement talent”

Restraint on salary increases

The apparent recovery in certain key sectors e.g. banking & FMCG

The growing demand for leading edge SRM experience

 Now three months later with the election behind us and fresh concerns expressed in the media about the economic recovery, we look at how the market conditions are affecting procurement professionals and their careers:

The improved market conditions for permanent procurement roles that we observed in March have continued and strengthened to a degree during this period.  Demand remains strongest in the middle market (£40-£80k) although there is little evidence of much movement at the most senior end of the scale. It remains to be seen when there will be real movement in the Director of Procurement / CPO market, but with so little activity at that level over the last two years we expect the big roles to be fiercely contested when they do become available, possibly later this year.

 The overall picture across all professions is stronger, with a leading research organisation reporting in May that demand for staff increased for the eighth month in succession, whilst the availability of candidates for permanent roles is down for the first time in two years.

Last quarter we observed some restraint on remuneration increases including bonuses, pay reviews and the increases in salary people seek to negotiate when moving companies.  This remains the case and in the current economic climate we would expect that to continue but there are organisations that are already having difficulty attracting the talent they need because of an inability to pay “market rate” and it will be interesting to see how this situation develops later this year.   

The interim market is currently in a relatively stable condition compared to 2009, but as we publish this report the real effects of the public sector cuts proposed by the new government are yet to be truly felt. There is a very strong suspicion with some early evidence to support it that spending on interim staff will be reduced, and this will be terrible news for the interim market as so many experienced procurement professionals have enjoyed some very lucrative contracts in the recent past on a variety of public sector projects.

Our fear is that the market will be flooded with contractors from the public sector over the next quarter, many of whom will be coming into a private sector interim market that has seen a substantial correction in day rates and margins over the last 18 months. This will lead to excess supply, causing further pressure on day rates and may prompt many career interim managers to consider going back into permanent roles. The early signs are there, and we have had many enquiries already from people concerned about whether their contracts will be extended or even terminated early so we will be watching this part of the market closely.

Most public sector senior managers that we asked for their thoughts on the subject were understandably reluctant to make any comment on the impact of the cuts at this stage, but one said “all recruitment, including approved vacancies, is frozen, and now has to be approved at a level which will inhibit us from even making the request!” We will be monitoring this situation closely and will comment on the impact this is having on procurement in our Q3 update.

In some of the key private sector industries the story is more positive with evidence that banking, retail, FMCG and leisure have continued the encouraging trends we observed last quarter. Furthermore both the technology and consulting sectors which we expressed concern about in our last report are now recruiting more in procurement and we believe this is a very encouraging sign.

Our focus on the SRM world as a result of our research and the growing evidence of a clear trend towards greater emphasis in vendor relations is proving to be very interesting.  As our reputation grows as a specialist recruiter for the discipline, we are engaging with more organisations and leading professionals than ever before and we expect to see more evidence of greater emphasis in this area in the second half of the year.  We remain particularly keen to speak to as many professionals with involvement in the area as possible. For more information please visit: http://www.edburydaley.com/supplier-relationship-management/ or join our network at http://uk.linkedin.com/in/edburydaleyandrew

There has been some further analysis of Supplier Relationship Management (SRM) trends undertaken by our research partners 105 Consulting which is available below.  The findings highlight that whilst SRM is now considered critical to many businesses, it seems value is being ‘left on the table’ through insufficient focus, installation and application of SRM capabilities and practice. To access the report click here: http://www.105consulting.com/main/images/stories/pdfs/srm-practitioner-survey.pdf

Future research projects:

We intend to announce the subject for our next online survey and research report at the end of July and will be inviting you all to contribute later in the summer and autumn.  Our previous reports are available here:

The growing importance of SRM: http://www.edburydaley.com/wp/wp-content/uploads/2010/02/EdburyDaley-SRM-jan-2010.pdf

The impact of the recession on procurement: http://edburydaley.com/wp/wp-content/uploads/2009/04/edbury-daley-the-impact-of-the-current-economic-climate.pdf