Improving an organization’s procurement brings benefits far beyond saving money or raising quality standards. It can dramatically improve the valuation of the organization as a whole.
At a time when many companies are facing tough times, procurement is becoming recognised as an essential component of corporate strategy for leading organizations. It is well understood by CEOs and CFOs that buying more efficiently can bring big cash savings and more revenue through improved quality of goods and services as well as more reliable supply chains, but its strategic impact is now starting to elevate CPOs up the corporate agenda.
Procurement projects are traditionally aimed at reducing the purchase price of goods and services and improving on the value delivered, through for example, increased functionality or increased quality of service. They often produce very quick wins which can amount to millions of dollars of value for larger organizations. Cashable savings can often be identified for a wide range of categories including indirect items (office supplies, telecoms, facilities for example), direct categories (raw materials, front line services etc.) and now even to very complex categories like transportation or construction, traditionally considered extremely difficult to manage. At the same time, the supplier base can be streamlined and procurement processes rationalised, producing further immediate benefits in terms of lower transaction and administration costs.
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