Procurement plays a crucial role in cost management for companies of all sizes and industries. By effectively managing the acquisition of goods and services, organizations can reduce costs and improve overall financial performance.
According to a survey conducted by the Institute for Supply Management (ISM), the average cost savings achieved through strategic sourcing was 9.2% in 2019. Additionally, a study by Deloitte found that companies that prioritize cost management through procurement can achieve savings of up to 15% on their total spend.
One example of a company that has effectively leveraged procurement for cost management is Walmart. In 2017, the retail giant announced that it had saved $2.7 billion through procurement cost-cutting initiatives, including reducing the number of suppliers and negotiating better prices with existing ones.
Another example is GE, which has implemented a global procurement organization and processes to increase efficiency and drive down costs. Through standardizing processes and leveraging its size and scale, GE was able to achieve $10 billion in savings from procurement in a single year.
In addition to cost savings, effective procurement can also lead to improved supplier relationships and increased operational efficiencies. A case study by Accenture found that by implementing a centralized procurement function, a large telecommunications company was able to streamline its supplier management and improve communication with vendors, leading to improved delivery times and a 25% reduction in supplier-related issues.
Overall, it's clear that procurement plays a significant role in cost management for companies of all sizes and industries. By implementing strategic sourcing initiatives and leveraging the power of scale, organizations can achieve significant cost savings while also improving supplier relationships and operational efficiencies.
FactWise is a unified procurement platform with a fully integrated suite of procurement products. The platform is used by global product manufacturing companies to transform their procurement organization via analytics and automation. Its features enable you to reduce costs by up to 25%, automate four-way matching to reduce errors, and ensure your maximized DPOs meet the highest standard of accuracy. Smart notifications indicate due payments, so you never overpay or incur penalties via missed deadlines.