No good times around the corner for Ireland

While the TIMES headline today asserts ‘BRITONS SEE GOOD TIMES AROUND THE CORNER’ with talks of signs of increased consumer spending, a potential bumper Christmas and an exit from recession, by contrast the Belfast Telegraph leads on the Ernst & Young report forecasting that the economy on the island of Ireland will contract 6.7% this year: -4.1% in the North and -7.3% in the South.

Furthermore, Ernst and Young predict that it could be 2 years before Ireland comes out of recession and warns of the potential of a ‘double dip’.

So what are the options for struggling Irish businesses?

Reduced staffing levels, whether through redundancies and/or short time working have certainly reduced payroll costs already. More redundancies may be forced.

However, a key target for downsizing is always the overhead functions and the middle management tier. It was these people who focused on keeping business processes efficient, supply costs tight and service levels to the required standard. As the recession elongates the erosion of efficiency in these areas will become more and more marked.

In Ireland we are now seeing that while opportunities have increased to reduce overhead costs due to the intense competition of supply, an increasing number of businesses are now unable to take advantage of these opportunities. Even those few organizations focused on achieving the Pareto related goal of getting 80% of overhead spend on contract are now falling short of the mark. They no longer having the internal capability to determine the current supply needs at the detailed level, present effectively to the market and evaluate ongoing contractor performance.

It is no longer just the 20% ‘tail end’ of spend or the specialist areas where a strong cost and purchase management partner can have an impact.

The amount of potential ‘hidden savings’ is increasing as is the need to find them, whether it is just to ‘keep the lights on’ a while longer or to invest in core capabilities for when the upturn does, eventually, come