Summer, February 2012

Two Speed Economy, Low Gear Productivity

At a recent UBS Wealth Management presentation attended by The Faculty, the audience was surprised to learn that Australia had one of the lowest productivity levels in the world.

Scott Haslem, Chief Economist of Australasia at UBS Investment Bank, warned that while this has not yet been reflected in Australia’s economic performance, due to current attractive international terms of trade and rapid growth in capital stock and population, this will not be the case in the near future.

The turbulent global economy, Australia’s skills shortage, slowing demands from India and China and infrastructure bottlenecks will eventually expose us to the realities of poor productivity – the risk of slower growth, weaker corporate earnings and industrial unrest.

What does this mean for procurement leaders such as yourselves, and what can you do to lead a change?

Driving change and embedding best practice are at the core of any Procurement team, and The Faculty has long held the belief that Procurement is in a prime position to bring about sustainable improvement in our organisations’ productivity by:

  • Encouraging innovation and process improvements to squeeze out inefficiencies from business practices
  • Focusing on value drivers that are important to your stakeholders, being disciplined in choosing what you work on and measure, doing a few things, and doing them very well
  • Keeping your planning horizon to a realistic time frame that is relative to the speed of change in your industry
  • Investing in the procurement skills and knowledge of our practitioners
  • Engaging with other procurement professionals to share knowledge and expertise.

As the profession grows and occupies an ever more strategic role within the organisation, it also cultivates the right blend of commercial acumen, leadership, innovation and change management skills needed to tackle this productivity decline, to ensure their business remains competitive on a global scale.

"Australia – will lower domestic rates or global gloom prevail?" Scott Haslem, Chief Economist Australasia, UBS Investment Bank.