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Procurement improvements 'could help to offset impact of inflation'

17 August 2011

UK businesses could mitigate the impact of inflationary pressures by adopting an improved procurement structure, according to a new report.

Analysis from business advisory firm the Hackett Group has revealed that rising prices and other inflationary pressures could reduce corporate profits by as much as nine percent in 2011 and 2012.

At present, companies are failing to cushion this blow with appropriate management measures, with the report citing the "fragmented, siloed" approach taken to mitigating costs in procurement activities as an example.

Firms could therefore reduce their business risk levels by planning ahead and adopting a more integrated approach to their supply chain strategy, in which procurement and finance units work together.

Michel Janssen, chief research officer for the Hackett Group, said: "It's very tough to keep your promises to Wall Street when you can't accurately forecast or control your expenses."

Last month, Supply Management highlighted data from an Ardent Partners report showing that a gap in procurement skills among staff could also be causing problems at present.

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