CPSM Certification Training –
ISM Report on Business for January 2012
CPSM Certification Training has reviewed the ISM Report on Business for January 2012. We wanted to highlight some things we felt were important for Supply Leaders to note in order to take proactive action to protect their supply chain.
In one sentence, the ISM Report on Business for January 2012 shows an expansion in manufacturing and growth in the non-manufacturing sector. The numbers are positive for the economy because they indicate business is improving.
Question: How do we know these numbers are worth considering?
The ISM Report on Business Surveys the nation’s purchasing and supply executives who know the strategic objectives of their businesses and are take action to manage their supply chain. Fortunately, these supply professionals are willing to share their information that allows the rest of us to take action. To manage the supply chain, the executives have interpreted sales forecasts and market data in order to put resources in place to make their companies profitable.
Question: So what does this mean to us and what do we do?
For January, ISM Report on Business indicates expansion in the manufacturing area that tells us that the market will increase their demand for raw materials, manufacturing capacity, and logistics. Basic economics of supply and demand interprets this to mean an increase in demand without an increase in supply will force prices to go up. Supply Leaders should take action by securing contracts to lock in prices before prices increase.
Question: Are Supply Leaders and Sales Leaders linked by action and reaction?
The ISM Report on Business Non-Manufacturing Index indicates growth. The Non-Manufacturing Index looks at several other factors related to the supply chain. With growth in these areas, Supply Leaders can see companies are beginning to see inventory movement and growth in business activities to secure the supply chain. Increased Business Activity with new orders, new hiring, and price increases confirm the information derived from the Manufacturing Index that demand on the supply chain will increase and supply leaders should take action to secure favorable pricing.
Before we panic and secure the current prices on the market, look at one metric that tells us Supply Leaders might have a favorable negotiation position… Inventory Sentiment.
Inventory sentiment from ISM Report on Business tells us that supply professionals feel inventories are too high, so businesses might be willing to make a deal!!! How long they are willing to make deal is anyone’s guess, so do your own analysis of your markets and take action.
Question: How can Supply Leaders and Sales Leaders work together to develop win-win situations based on the current report?
Of course each business in different based on market factors so the information discussed in the article as well as the information provided in the ISM Report on Business needs to be consider WITH data and information for your business.
Recommend you do a correlation analysis to determine how the metrics presented in the ISM Report on Business influence factors within your market and your business.
Have a great month in supply management.
To your Success!!!
Jack Quinn Solutions, LLC