Procurement Leaders asked the Procurement Intentions Panel of cross-industry CPOs, whether in response to current European political risk they were engaging in additional risk review activities of their European supplier contracts.
In response, 42% said they were indeed reviewing their contracts but 58% said they were taking no action.
The risk for CPOs here, the panel revealed, centres on whether one or more members of the euro zone is forced to drop the euro as a currency, something that has been speculated for some time, particularly with regard to Greece’s economic situation.
One procurement chief from the food and beverage sector told Procurement Leaders that in response to this risk they have taken action in a number of areas: “We have built new terms into our supplier contracts which would mean that if the euro did collapse as a currency we have a clear remedy detailing which currency we would use in place of the euro and also the exchange rate which would be applied to the transaction.
“We are also looking to protecting our payments with bank guarantees and are looking to diversify our supply base in case any suppliers go into administration,” they said.
The CPO added the action being taken was however trying to be sensitive to the situation and not aggravate it by completely avoiding the use of suppliers from these potential risk areas.
The remaining 58% of CPOs who indicated they are taking no action have either already reviewed their contracts or, worryingly perhaps, have decided that there is simply no need to do anything.
Procurement Intentions is a unique intelligence service and strategy barometer which provides CPOs insight into top-level, strategic issues to aid their decision making. It is underpinned by a permanent panel of CPO-level executives, spread equally across different industries and regions.
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