Wanted: formalized center-led sourcing processes
Staff -- Purchasing, 4/4/2002 2:00:00 AM
PURCHASING's CEO Report (see page 23 of this issue) identifies a 
number of practices common to firms that routinely bank 3-7% per year worth of savings on the spend sides of their balance sheets. One of these practices involves commissioning of authoritative, center-led purchasing and supply management organizations often with direct-line reporting to the company's president or chief executive officer. Another best practice in cost management involves use of formally articulated strategic sourcing processes.
On the former score, the CPI shows substantial progress, according to PURCHASING's study. Nearly two thirds of CPI buyers surveyed say their procurement of chemicals is primarily centralized companywide, while another 15% report a hybrid centralized/decentralized format for making chemical deals. Looking ahead, the trend to centralization will continue as 33% of CPI buyers surveyed say chemical purchases will be more centralized two years out vs. only 6% who see their companies moving toward more decentralized buying. The latter practice, that of using formally articulated decision processes for strategic sourcing, is somewhat less popular among CPI companies. Only 31% of buyers surveyed classify their company's strategic sourcing processes as well defined while 69% say they're more likely to be shooting from the hip when striking big deals. Bigger chemical end users are more likely to use standard strategic sourcing processes (49% use defined strategic sourcing processes) than smaller volume buyers (26% employ standardized sourcing processes).
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