Sourcing Drives Cost Savings, But Leakage Can Be Significant Problem

Now that all eyes are on the procurement department to drive operational performance and cost reductions, strategic sourcing has become more important than ever before, according to new research by the Aberdeen Group.

The new report, Strategic Sourcing: The 2010 Guide to Driving Savings and Procurement Performance, gauged the sourcing programs, processes, and performance of over 400 enterprises and found that Best-in-Class enterprises are:

51 percent more likely to engage in collaboration with other internal units than all other organizations.

30 percent more likely to have standardized sourcing processes.

29 percent more likely to automate their spend analysis systems.

Interestingly, Aberdeen also found that the average enterprise in the study loses 2.2 percent of its savings due to leakage more proof that it's becoming increasingly essential for procurement and finance teams to work collaboratively so that negotiated agreement terms are realized.

"Savings leakage is a prime concern for enterprises in the midst of economic recovery," says Christopher Dwyer, research analyst, Aberdeen. "Gaps in technology and process, as well as a failure to conduct due diligence and apply efficiencies in contract lifecycle management, are causing organizations to lose a significant chunk of their identified savings."

A complimentary copy of the report is available at

TAGS: Finance
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