Source : Procurement Leaders
There will be a growing focus on cost reductions through implementation of initiatives such as indirect procurement, new research predicts
More than half of Fortune 1000 executives are focused on cost reduction strategies for delivering earnings and funding growth in 2012, according to the recent survey commissioned by Procurian and conducted by Harris Interactive.
The poll of 300 Fortune 1000 executives finds that, in the coming year, 60% of respondents will be implementing so-called non-people initiatives as their major cost cutting strategies. But a third indicated they will turn to layoffs or downsizing.
Half of Fortune 1000 executives say reducing indirect and non-product input costs could provide significant savings, without disrupting business.
"Fortune 1000 executives cite limited resources, large, disparate organisations, and lack of information as reasons why managing indirect spending has been a challenge for them," according to the report.
More than 70% of executives polled say that their purchasing group does not play a highly strategic role, with global impact, in managing indirect and non-product expenses.
“With the slow growth that we’ve seen globally, it’s no surprise that companies remain focused on managing costs in 2012,” said Carl Guarino, CEO of Procurian. “What’s unique about this data is that the majority of companies are focusing on their indirect costs, which is an area of spending that has been largely undermanaged in the past.
"As companies have exhausted other cost reductions such as layoffs or downsizing, they’ve started to look elsewhere for savings that can be used to improve margins or fund product innovation and growth, and have identified indirect spending as a significant source of savings.”