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

The permanent market is much improved for Senior Buyers, Category Managers, Procurement Managers and SRM specialists since Q3 2009. There is certainly more confidence amongst employers and the number of vacancies is up on earlier this year and late 2009.

It appears that the battle for talent that was a key feature of the pre recession market is starting again although there appears to be more restraint on salary increases at present. The busiest area is the £50-£70k bracket.

The interim market has stabilised after a difficult period last year. There remains pressure on both day rates and recruiter’s margins but the number of interim procurement specialists looking for a contract is certainly down from Q3 2009.

In both markets there are encouraging signs that some industries which suffered the most last year are beginning to look forward again and make key appointments. The sectors include banking, retail, leisure and FMCG.

 Back in Q1 2009 and through our research into the impact of the recession on procurement (see link below) we predicted that there would be a significant rise in demand for experienced staff from procurement consultancies. They anticipated a busy year as potential clients looked for quick wins and specialist advice on cost base reduction.  This demand hasn’t materialised as much as we anticipated as some potential clients decided against engaging consultants to the extent that had been hoped. 

The technology sector remains quite cautious with a number of hiring freezes still in place and the demand for IT and Telco category specialists from end users has not recovered to the extent seen in other areas.

As we expected in our recent research into SRM (link below) there appears to be a growing demand for specialists with experience of developing and implementing leading edge supplier management strategies. We anticipate demand outgrowing supply in the next 12 months as numerous organisations have realised the value and potential competitive advantage that lies in more productive relationships with key suppliers, particularly as a result of the impact of the recession,  a trend observed last year in the research mentioned above.

We have been contacted by a lot of jobseekers with SRM experience and are in the process of developing a specialist recruitment practice to focus on this area.  You can join the SRM networking group we  have set up here: http://www.linkedin.com/groups?gid=2837993&trk=fulpro_grplogo

Would you like to comment on any of the issues addressed here? Join the discussion here: http://www.edburydaley.com/wp/2010/03/19/procurement-market-update-–-march-2010/

Links to research reports

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

We welcome your comments on how useful you find our research here: http://www.edburydaley.com/wp/2010/02/24/the-growing-importance-of-supplier-relationship-management/

 The final quarter of last year saw a noticeable improvement in the market conditions for procurement professionals after a period of uncertainty created by the credit crunch.  The early signs this year are that this should continue and we believe the following factors have contributed:

• Improvement in a number of key economic indicators leading to better confidence in the economy
• Procurement’s unique ability to make a case to overcome “hiring freezes” in major organisations
• Greater urgency from clients to make appointments, especially where previous restrictions have applied
• Use it or lose it – a desire to spend budget before the end of the financial year
• A willingness to “get on with it” after a period of uncertainty
• Greater demands from senior management on procurement to deliver results  

The interim market also improved after a quiet summer with less availability of candidates than the first half of the year, although there remains some pressure on both contractors pay and recruiters margins.  The recovery in the interim market is due to:

• The need for additional resource when permanent head count is restricted
• The flexibility interim managers offer in uncertain market conditions
• The success many organisations have had in “squeezing” interim costs

At EdburyDaley we have been particularly active in the recruitment of senior category roles, head’s of function, vendor management/SRM and several international leadership appointments on both an interim and permanent basis during this time. If you have a key role in your team that needs a high calibre candidate then please talk to Andrew Daley, Charlie Bolam or Hannah Jackson.  Contact details here: http://www.edburydaley.com/contact2/

News

The latest EdburyDaley research project into The Importance of Supplier Relationship Management will be published next week.  With analysis from the Director’s of 105 Consulting we are confident that it’s the best survey we’ve produced yet. There are some fascinating comments on the subject and significant evidence that the standard of SRM capability can be improved upon in several different ways.

To register to receive a copy of the survey results, please e mail info@edburydaley.com

What is clear is that specialists in Supplier Relationship Management and/or Vendor Management arena are aware of the key issues we have raised.

Some of the positive comments include:

From an interim SRM specialist: I have just finished reading the report and wanted to congratulate you on a very interesting piece of work. Clearly there is a great opportunity in the SRM arena…

From the SRM leader of a major finance business: I really enjoyed reading this report, particularly as I am personally responsible for leading a project within my organisation to address the specific issues you raised. You certainly have given me a useful reference point that I will use to ensure that I continue to progress in the right direction.

 If you are aware of any organizations with what you consider to be a “best in class” to SRM, can you please let me know as I would welcome the opportunity to speak to them? 

What do you think?  Please contribute to the debate here.

Comments from the SRM lead of a major technology organisation: I’m in full agreement with the findings.  Whilst establishing a new SRM function at my current employer over the past 18 months I sought to find best practice at other organisations and have been surprised that very little exists beyond the basics.  

Having now set up and executed SRM basic performance measurement through to relationship management / governance and the pursuit of value through managing relationships we are very pleased with the impact its having within the business and our key suppliers.

“Real SRM is the one of the most important factors for success in a procurement role. However most SRM being discussed today is in relation to IT systems and not the real soft skills that will bring innovation and improved business performance to bear.”

Do you agree? 

Our experience tells us that there is certainly a lot of investment in Vendor Management in the technology sectors at the moment, and we have been encouraged by the number of SRM specialists who have got in touch with us about their careers since the survey was published.  Again the evidence is that a technology focus accounts for a lot of the biggest SRM roles.

Are you in an SRM or Vendor Management role with a different category focus?  We are keen to hear from you about your experience and your career aspirations.