Ascend to higher levels

Portfolio fund managers come up with an effective investing plan by properly identifying their entry and exit strategies through quantified risk-reward mix. Typically, such a risk-reward mix is expressed in terms of anticipated returns, which are often benchmarked to yields provided for by other securities instruments. These are deliberated by decision-makers, especially when it comes to “expected threshold” that optimizes return when plotted against a specified investment horizon.  Moves to either buy or sell are best supported by technical analysis, specifically in gauging price and volume movements.

Meanwhile, a unique discipline exists when negotiations are facilitated in an e-Marketplace, especially in an exchange that captures items across industry categories. Besides having to contend with diverse corporate culture and stages of technology adoption, efforts to ensure transparency is starting to emerge from merely putting the negotiation round within an acceptable tech-based process flow covering supplier accreditation, migration, requirement posting, actual auction and awarding. In fact, more and more enterprises are evolving to a stage where appropriate “input-output” variants are determined, especially those that create a sizable impact on demand-supply movements. There are items more sensitive to distribution costs (e.g., fuel price-sensitive items), rent and electricity charges, labor or even other “qualitative” aspects such as delivery, after-sales service and corporate governance, to cite a few.

While expected returns can be properly set relative to investments, the same cannot be singularly made within the purchasing process. It is not enough to merely set a ballpark figure relative to absolute expected savings, for example, as items procured vary depending on the level of a unit’s importance within the overall supply chain. For example, C-level mandate to reduce costs by 15 percent is easier said than done, as thorough analysis must be made to check if expectations are “realistic” when subjected to the actual pulse of the market.

Let’s talk a quick look at the peso’s appreciation vis-a-vis the greenback. The present view so far is that as a result of an expected influx of investment in capitalized industries such as mining, exploration and business process outsourcing (BPO) and OFW remittances, some economists see the peso strengthening further, possibly until the first semester of 2008. Given this, there are suppliers who might not be as “responsive” in terms of reducing their selling prices, at least abruptly over the near-term. This might be due to possible inventory front-loading, especially if ill-timed when the local currency traded is weaker vis-a-vis the US dollar. Therefore, the smarter approach to obtain “feelers” is when bids are gathered online, enabling buyers to cross-check suppliers with commendable “hedging” strategies.

Meanwhile, suppliers who participated in e-Marketplaces early on are more able to gauge appropriate demand trends, apart from broadening customer coverage. In fact, pricing initiatives are amplified, especially when it comes to arriving on a “blended” scheme that is neither too harsh on budget nor burdensome for markets served. Suppliers can also “smoothen” demand seasonality, especially since a slow season for a customer might be the reverse for another. As a result, suppliers’ sales teams benefit via “multipliers,” allowing most to establish long-term contracts and maneuverability in planning their respective production schemes.

Despite challenges encountered this year, there are pluses to count and opportunities to look forward to as both buyers and suppliers greet 2008 with a higher sense of vision, mission and objectives.  Perspectives are enriched when leaders view intangible elements that help fortify an enterprise’s growth, beyond number expectations.

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The author is the general manager of SourcePilipinas.com Inc. and 2TradeAsia.com. For queries, e-mail [email protected] or [email protected].