Purchasing managers poll: some attitudinal shifts for '97

Prepared Foods, April, 1997

These were some revelations extracted from Prepared Foods' second annual purchasing managers survey, which plugged in feedback from 59 managers with purchasing authority. The survey, mailed in February, is geared to determine perceptions among purchasing managers regarding the economic outlook for their companies, expected purchasing plans within the next 12 months, and expectations for price changes in operations costs and key packaged good products.

In comparison to '96, purchasing managers mainly stayed the course in equipment purchasing priorities. Packaging equipment (76%) and processing equipment (75%) led the pack. This largely mirrored last year's tabulations. A stark contrast was seen in material handling equipment, as 61% regarded it a spending priority this year, while last year only 40% did.

Expensing those equipment items stemmed from the need to replace current equipment (79%), for a new manufacturing plant (77%) and for adding production flexibility (63%). Bringing in new equipment for production efficiency did a flip-flop in '97, as only 21% acquired equipment with production efficiency in mind, compared to 80% last year.

The anticipation of significant raw material cost increases is not in the tarot cards - or at least not expected to ratchet upward like last year. Just 44% stated they expected bulk commodity ingredient prices to increase (compared to 54% last year), while only 51% believed minor-volume specialty ingredients costs would increase (compared to a whopping 72% in '96). Of course, uncertainty also prevailed as 24% and 27%, respectively, had no answer.

With regard to the top five factors vital to selecting a supplier, price was a unanimous 100% - up from last year's 94% response. But unlike '96 when all 50 polled placed quality in the top five, only 97% did this year. Rounding out the top five factors were: delivery (86%), after-sale support/service (53%) and partnering/strategic alliances (47%). At the bottom of the list - operator training (3%) and ISO 9000 certification (2%).

In rating current business conditions for their companies, the vast majority (54%) called it "good," well above last year's mark of 44% "good" responses.

In rating current business conditions compared to last year, 58% thought it "better" than in '96, with 35% responding "same." Last year, the majority thought conditions were the "same." Eternal optimists most, 81% see business conditions being better one year from now, and that for the most part (75%) managers will keep staff levels unchanged.

Addressing cost changes expected over the next 12 months, spending categories were separated into six areas: Ingredients, equipment, labor, utilities, packaging materials and compliance. Managers expect the greatest percentage cost changes in labor (58% increase) and packaging materials (56% increase).

As for their own pricing strategies for key packaged food products over the next 12 months, 66% see prices staying stagnant, while 25% anticipate an increase.