Research Update
Staff -- Purchasing, 11/3/2005
- Supplier performance measurement programs improve supplier performance by more than 20% according to a recent study by Boston-based Aberdeen Group. The research found that supplier performance management programs in place for more than 18 months showed greater improvements than those in place for less than that time and programs standardized at the division level outperformed those that weren't standardized. There were also improvements when measuring more than 20% of suppliers.
- Procurement business process outsourcing (BPO) is a bigger market than many business professionals may think, according to a new study from IDC Research, because many contracts are not made public. "The procurement BPO market has steadily expanded over the years, experiencing growth well above that indicated by publicly known contracts alone," says Shruti Yadav, analyst at IDC. The vast majority of procurement BPO contracts have come at organizations with more than 1,000 employees. The biggest drivers of procurement BPO is the need to redirect focus on core competencies, reduce costs, standardize processes and technologies, and contend with rapid overall growth.
- The average procurement department should be nine employees. So say one-third of companies surveyed in a recent poll by research firm Best Practices. In a recent benchmarking report, Best Practices found that companies in most industries have applied lean or Six Sigma to supply chain strategy, but supply chain executives can further use success process improvement to tout the benefits brought about by the supply chain organization. The report also showed that 26% of those companies survey reported supply chain costs were less than or equal to 5% of total revenue. The overwhelming majority of respondents (92%) said they use face-to-face meetings to discuss supply chain initiatives and communicate value internally. Outsourcing in the supply chain is on the rise, as well, according to the survey.
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