The cost of third-party supplies rises dramatically when companies cut their investment in professional purchasing and do not staff it appropriately, say consultants Efficio.
In its latest Viewpoint article Efficio says it is generally recognised that investing in procurement can result in big savings often amounting to millions.
But it is less understood that when procurement is reorganised, its personnel redeployed or staff not replaced, it can cause huge disruption to a business.
In the Viewpoint, titled You don't know what you've got till it's gone: What happens when procurement disappears? Efficio Vice President Juraj Priecel says a major European manufacturing company suffered a 6 per cent rise in costs across its indirect spend categories within months when several procurement personnel left.
He says this is typical -- loss of procurement resources usually results in an increase in costs for the company of 6-10% for indirect categories and 2-5% for direct categories within 12-18 months.
Priecel concludes: "When procurement professionals are no longer there to keep an eye on contracts, deal with suppliers day-to-day, renegotiate deals where necessary and monitor the supplier markets, cost increases will result as night follows day.
"There's a lesson here for top management and decision-makers about the value of investing in procurement."
Notes to editors
You don't know what you've got till it's gone: What happens when procurement disappears? can be downloaded from: http://www.efficioconsulting.com/_uploads/documents/view-poi...
Efficio is a results-focused procurement consultancy with a track record of helping leading organisations achieve more value from their procurement. It is headquartered in London, UK, and has offices in France, Germany, Switzerland and the US.
Efficio combines the credentials of a top tier firm with the depth of expertise of a flexible niche player. Clients include 3i, AstraZeneca, Barclays, BAT, Biffa, British Gas, Ford, Scandic, HBOS, KKR, Nokia, National Grid, O2, Tryg and Thames Water among others.
For more information please contact:
Georgina Golding, Marketing Manager, Efficio, on:
+44 20 7550 5681 or email@example.com
For further information on Efficio please see: www.efficioconsulting.com
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