From Potential to Actual: Capturing Sourcing Savings
By Randy Watson and Suman Sarkar -- Purchasing, 4/1/2008 12:23:00 PM
The power of strategic sourcing cannot be denied. For some companies, reducing costs on goods and services purchased a mere 10 percent has proven to be equivalent to a 25 percent increase in revenue in terms of influencing overall profits. But as powerful a tool as sourcing has proven to be, much of its anticipated benefits are being left on the table in many cases. While companies are sourcing their spend in an effective manner and developing strategic relationships with their supply base, not all of the anticipated savings agreed to in contracts are flowing down to the bottom line, which puts the credibility of the entire procurement organization at stake.
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