Buyers lead cost-cutting drive

25 January 2010

25 January 2010 | Helen Gilbert

International firms are increasing their reliance on purchasing to reduce costs, according to research from McKinsey & Company.

A global survey of more than 300 operations and senior executives found companies have been making significant cutbacks since the start of the economic downturn in September 2008.

Almost 75 per cent of respondents believed cost containment or reduction would continue to be among their top three priorities over the next 12 to 18 months. As a result, firms are looking to buyers to find savings.

“More than half of all respondents say their organisations plan to lower non-labour costs through the use of strategic sourcing or procurement effectiveness initiatives,” the report said.

It added that procurement had already been effective in saving money. Since September 2008, 48 per cent of firms have focused their cost-reduction efforts on non-labour expenses, such as purchased goods and services and travel.

Buyers, meanwhile, are prepared for additional pressure to cut costs. Some 38 per cent of respondents to a recent SM100 poll named cost-cutting as their top priority for 2010.

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