With prices rising, it may be time to take a closer look at procurement. For many businesses, the procurement process represents a valuable opportunity to save money and reallocate resources. In a recentBain & Company executive survey, more than half of the respondents said cost pressures constrain their ability to make strategic investments. Considering that procured costs can represent 25 to 60 percent of a company’s total costs, it’s well worth examining how this process could be managed more effectively.
Despite procurement’s significance and cost-saving potential, there is plenty of evidence to suggest that for many companies, this is an area with lots of room for improvement. When Bain & Company surveyed executives about their experience with past procurement management initiatives, 72 percent of the respondents felt that they do better and save substantially more than they have in the past. This belief was expressed just as often by the heads of procurement as it was by CEOs and CFOs.
While most executives realize they could reduce their procurement costs, actually making it happen is no easy task. Without a predefined, systematic plan for reducing costs, most organizations never fully reach the potential savings. But again, it’s not easy to create and implement such a plan. For example, 77 percent of the executives surveyed noted that their companies’ procurement efforts are especially weak when decisions are fragmented across many buyers.
This study demonstrates the need for better integration of the procurement process. In fact, research indicates that by implementing the right tools and processes in a number of key places, you can cut procurement costs by 10 percent. Procurement Partners offers a wide variety of automation and cost containment processes to help you save that 10 percent, or even more. Contact us to learn more.