Who's got strategic sourcing on the brain?
Staff -- Purchasing, 8/17/2004 2:00:00 AM
Matsushita Electric Industrial Co., the world's largest maker of consumer electronics, will cut group procurement costs by 10.5% or $4 billion in the year ending March 2005 and reduce the number of parts used in products to about a tenth of the current level of about eight million units. Matsushita, which posted its first profit in three years in the business year just ended, has been cutting costs in part by closing a factory and expanding retirement plans to reduce its workforce at home and shift abroad output of lower cost goods, such as cathode-ray tube televisions.
Even the "Governator" has strat sourcing on his mind. California Governor Arnold Schwarzenegger announced a plan in late June to bring in an outside firm to implement a strategic sourcing program to leverage the state's $4 billion spend. American Management Systems, a management consulting firm based in Fairfax, Va., won a three-year contract from the state's General Services to implement and run the California program. "Given our current fiscal crisis, we need to take full advantage of California's purchasing power to get the best service and the best products for the best price," Schwarzenegger said in a press release. "We will save millions of dollars just by being smarter about how we buy things." The company, one of two bidders for the contract, will be paid 12% of the savings that result from the new purchasing methods.
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