Sourcing not strategic for a quarter of firms

22 June 2008
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23 June 2008 | Paul Snell

More than a quarter of sizeable firms in Europe, the Middle East and Africa do not do strategic sourcing, according to research.

A study of 230 businesses in the EMEA region by the Aberdeen Group found although 26 per cent of firms have had a strategic sourcing programme in place for more than five years, 28 per cent do not have one. More than three-quarters of the businesses surveyed have annual revenues of more than ?50 million (£40 million) a year, including 40 per cent with revenues of more than ?1 billion (£791 million). It also found only 18 per cent of these organisations had standard processes for sourcing across the business. And a further 16 per cent of companies had standard processes across a region or business division. But 18 per cent of firms had no formal processes at all. Cost reduction was found to be the greatest driver of sourcing programmes, over 30 per cent more important than the next highest priority, the need to improve and develop category management. It also discovered firms are set to boost sourcing from Eastern Europe. Some 75 per cent of companies expect to increase the amount they buy from the region, compared to 69 per cent augmenting how much they buy from China and 67 per cent from India. Those companies performing the best at strategic sourcing were able to make cost savings of more than 10 per cent, compared with the worst performers who were only able to make less than 4 per cent.



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