The Economic Impact on Purchasing Management Decisions Essay

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Purchasing Management

A Purchasing Manager must ensure that all the necessary supplies, tools, and stock inventory are available for operations to proceed smoothly and at an undisturbed pace. Counting inventory, ordering goods/items, and keeping stock of prices in a fluctuating market so as to not go over budget at any given time are all important aspects of the job.

In today's market conditions, one of the main challenges that a Purchasing Manager can face, however, has to do with global economic conditions, which are hovering on the brink of recession or even outright depression if the warnings of some economic analysts are to be taken seriously. As Zorzi, Chudik and Dieppe (2012) assert, fundamental imbalances in the accounting practices of banks, corporations, multinationals and governments around the world have tilted the playing field in such a way that it is now a veritable slope, with all players losing their footing as a result: indeed, "the chance that current accounts were aligned with fundamentals prior to the financial crisis appears to minimal" (p. 1319) the researchers state. This may be taken as a condemnation of the whole, a new generation of Enron-style "mark-to-market" practitioners playing with fire.

How does this impact the Purchasing Manager's ability to budget, order and plan for production flows within his own company? Some items, goods and commodities may be hit harder than others in this market while others may be viewed as a store of wealth.

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Palladium and gold, for instance, are rising in price at this moment, as the value of currencies drop in countries like Canada, South Africa, Russsia and China. Furthermore, a strong USD impacts the exchange that can be made as various countries (like China) seek to export deflation.

Thus, there is an economic cost that must be considered in today's on the verge of being depressed global economy. Scarcity and abundance will be issues that affect pricing. Oil costs have plummeted recently and for individuals and companies looking to purchase cheap oil, this may be viewed as a good thing -- but for oil producers it is devastating, with shale oil companies having to close their doors all over the U.S. as it is not profitable for them to maintain their businesses with barrels of oil selling at such a low price. With more businesses shuttering their doors and more workers left without the jobs, the U.S. economy will tilt even more in a dangerous slope towards full-blown depression.

This will weigh on the Purchasing Manager as well. In a depression, what is the expectation of goods being sold to consumers? Does the company manufacturer items or products that are deemed a necessity or a luxury? If the latter, the Purchasing Manager may do well to assess….....

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