Pushing Procurement Savings to the Bottom Line, Increasing Corporate Competitiveness Both Dominating the CFO Agenda, Says AberdeenGroup
BOSTON–(BUSINESS WIRE)–Oct. 11, 2005–Following a benchmarking study of 100 CFOs and senior financial managers conducted with Business Finance Magazine, AberdeenGroup has published a new report, “The CFO’s View of Procurement: Getting More to the Bottom Line.” According to the new report, economic uncertainty, slower revenue growth, and lower profit margins are placing greater demands on finance and purchasing functions to control costs. Despite the advances purchasing groups have made recently, chief financial officers (CFOs) are identifying process limitations hindering procurement activities from becoming key enablers of corporate competitiveness.
According to Jeff Pikulik, Aberdeen research director and author of the report, “On average, 34% of projected procurement savings finance books is dramatically lower than the 75% to 80% savings capture rate that sourcing managers report. Moreover, the overall gap that exists in actual savings far exceeds this functional discrepancy.” Enterprise-wide process inconsistencies create a gap that in many cases skews actual savings booked. Factors include:
– Functional interpretations of the term “savings”
– A lack of company-wide guidelines to calculate, track, and budget for savings
– Only limited use of formal procurement plans that link to actual business plans
According to Aberdeen research, less than one-third of all companies consistently consider cash flow and working capital elements as part of procurement savings goals. Finance’s direct or permanent involvement in procurement activities can increase bookings and provide another important procurement dividend.
– Nearly half of companies demonstrating best-in-class financial organization support achieved the highest level of spend under management.
– Improving the ability to uncover, analyze, and manage all third-party expenditures expands savings generated and boosts negotiated savings by 5% to 7%.
“The CFO’s View of Procurement: Getting More to the Bottom Line” provides insights into procurement’s strengths and weakness from the viewpoint of finance managers. The report also reveals purchasing and finance actions that have the greatest positive influence on financial performance.
To obtain a complimentary copy of the report, follow this link: http://www.aberdeen.com/link/sponsor.asp?cid=1972
About AberdeenGroup, Inc.
Aberdeen provides fact-based research and insights focused on the technology-driven global value chain. Aberdeen’s benchmarking, market and solution assessments, sales acceleration programs, and conferences support Global 5000 value chain and technology executives and the solution providers who serve them. For more information, visit www.aberdeen.com or call 617-723-7890.