What impact can you really expect today’s economic problems to have on prices you pay to suppliers? There’s more than enough doom and gloom to go around. That’s reflected in the fact that business owners are more pessimistic than ever, since the PNC Economic Outlook survey began in 2003.

Last fall, 10% of businesses were pessimistic about economic prospects. This spring, it was 21%. Now, that tally has hit 29%.

The three biggest fears:

• Higher energy costs (74%)
• Possible recession (71%) and
• Price inflation (65%)

Higher energy costs (starting with transportation expenses) and the weakening economy are forming a double-whammy for many Procurement/Purchasing functions. The short-term result is more companies will feel compelled to increase the prices they charge customers.

• 65% say they expect suppliers’ prices to go up over the next six months
• 47% of Procurement/Purchasing pros expect to pass that along to customers.

The snowball effect of these problems is frosting the credit market, according to the survey.

Is it more difficult to get credit now that it was just this spring?

• 25%, compared with 18%, say it’s more difficult to get credit.
• Only 7% say credit is easier to get, compared with 14%.

 More than half of the businesses surveyed already have a game plan for blunting this economic impact.

Five tactics:

• Increase shipping prices (including surcharges), cited by 25%
• Offer flex work options, by 22%
• Change delivery procedures, by 21%
• Cap services, by 14%, and
• Change hours of operation, by 12%.

Tags: cost, credit, customers, procurement, purchasing, shipping