10-fold savings for top buying functions

17 September 2007
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18 September 2007 | Antony Barton

The best procurement departments typically save 10 times their running cost, research has found.

A study by consultancy Accenture reveals that low-performing procurement departments save around four times their cost. In effect, the best performers, or "masters", spend half as much as low performers yet save 30 per cent more.

The report also says masters have a clear mandate from - and a better overall relationship with - senior management. They are also more likely to use a supply-base segmentation strategy, and all of those masters examined have centrally led category management.

The researchers defined master procurement organisations on their practices in six areas: procurement strategy; sourcing and category management; requisition to pay; supplier relationship management; workforce and organisation; and technology.

Accenture surveyed more than 600 executives across North America, Europe and Asia. For the study, it analysed the 225 respondents that gave the most detailed responses. Some 82 per cent of the interviewees were CPOs or directors of procurement, and 74 per cent were responsible for company-wide procurement.



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