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13 August 2013 | Will Green
The best buyers are achieving cost savings at a rate more than three-and-a-half times higher than the rest, according to a study.
The State of Strategic Sourcing 2013, published by Ardent Partners, also shows that ‘best-in-class’ procurement departments formally source 80 per cent of spend, a volume two-and-a-half times greater than rivals.
The difference is highlighted as CPOs report that identifying more savings is the top business pressure in 2013.
According to the report, the best-in-class produce year-on-year cost savings of 11.8 per cent, compared to the 3.2 per cent generated by others.
The report lists the factors that set apart the best-in-class – defined as the 20 per cent of enterprises with the highest cost savings and most formally-sourced spend – including standardised sourcing processes, use of data, and strong links between the sourcing and contracting processes.
The report said: “While globalisation, innovation and the resulting increase in competition have helped to streamline and improve business performance, they have also served to increase business volatility and supply management complexity.
“Strategic sourcing remains procurement’s primary method to combat these concerns and navigate the fast-changing landscape.”
The report said it is “unacceptable” for procurement departments not to have an e-procurement plan, recommends using spend analysis as the basis for critical sourcing decisions and suggests sourcing processes and systems should be linked.
Report author Andrew Bartolini, chief research officer at Ardent Partners, told SM: “Business cycles are collapsing, product cycles are collapsing. You need to be much better equipped at making smart decisions and moving to alternatives in the market place. Having a top performing sourcing organisation is and will remain vital to corporate success.”
The research covered more than 260 CPOs and other procurement and business leaders across the globe.