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Friday, March 30, 2012

Procurement Freshly Examined

Bain looks at procurement in some detail.    A crucial issue in organizations:
" ... Rising commodity costs and volatility in input prices have become facts of life. Basic commodities are under pressure not only from their own higher demand but also from increasing alternate uses. Only a handful of commodities will likely result in real shortages and constraints, but no matter what business you’re in, rising prices and volatility will become the norm.

Executives are feeling the pain. In a recent Bain & Company executive survey, more than half of the respondents told us that cost pressures constrain their ability to make strategic investments (see Figure 1). That is a big issue for nearly all companies, given that procured costs represent between 25 percent and 60 percent of a company’s total costs, depending on the industry. We frequently find that procurement does not get a commensurate level of organizational investment ... "  

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