January 2014

Organizations need to move beyond marginal cost reductions in 2014

While delivering savings remains the top procurement priority for most organizations, only 20 percent of companies substantially cut costs in 2013, according to a new survey of 545 procurement executives by the Institute for Supply Management (ISM) and BravoSolution. In fact, most procurement executives are expecting that the total amount they saved in 2013 won’t meet business expectations:

  • 60 percent expect to deliver 10 percent or less in savings.
  • 20 percent estimate 11-20 percent in reductions.

“Delivering marginal savings should be a trigger for procurement teams to take a step back and assess what’s working well, what isn’t and how the function can improve,” said Mickey North Rizza, VP of strategic services at BravoSolution, the strategic sourcing company. “If savings aren’t driving the business forward, procurement needs to find new and more meaningful ways of impacting the business.”

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