The Services Procurement Challenge

Sept. 27, 2006
Outside and indirect services spending averages 15% of revenue.

Optimizing the control and visibility of services procurement shows growing potential. For example, research indicates that outside and indirect services spending is now 58% larger than spending on direct goods and averages almost 15% of revenue, notes John F. Martin, senior vice president of strategy and technology, with Denver-based IQNavigator Inc. He also cites services as being inherently inflationary -- 2.7% over the rate exhibited by goods in the last 30 years.

Martin says the optimization of services procurement can offer both internal efficiency and operational competitiveness. Currently management control procedures are highly decentralized (45%) and highly manual, according to Arizona State University's Center for Advanced Purchasing Studies. The Center's research also reveals that 28% of the organizations studied have no formal procedures and that maverick spending at 24% is twice that of goods purchases.

Quad/Graphics, a printing firm based in Sussex, Wis., has found a solution to that problem: IQNavigator7, an on-demand service that can automate a wide range of services procurement. Quad/Graphics is now able to manage its contingent labor needs using the service.

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