Sourcing Deficiencies Cost Mid-Size Enterprises $134 Billion Annually, According to Aberdeen Study; New Report Benchmarks Sourcing Effectiveness and Identifies Best Practices for Strategic Sourcing in the Mid-Market

Business Wire, Jan 4, 2006

BOSTON -- Most mid-size enterprises lack disciplined sourcing practices, category expertise, and spending power to negotiate and maintain competitive supply chains, according to a new AberdeenGroup benchmark report, "Strategic Sourcing in the Mid-Market Benchmark: The Echo Boom in Supply Management." Aberdeen estimates that such deficiencies are costing mid-size U.S. firms $134 billion a year in missed supply savings opportunities.

Aberdeen's benchmark of 133 procurement and supply chain executives found that continued pressures to reduce costs and improve spending visibility and control have made strategic sourcing improvements a priority for most mid-size enterprises.

"Mid-size enterprises missed out on the first wave of supply management automation and improvements," said Tim Minahan, Aberdeen's SVP, Global Supply Research, and author of the report. "Continued pressures to reduce costs and compete in global markets have made strategic sourcing improvements for mid-size firms not just a priority, but a necessity for survival."

According to the study, more than half of mid-size companies have either launched initiatives to formalize and improve strategic sourcing capabilities within the past year or will do so within the next year.

Aberdeen recommends the following practices to formalize and improve strategic sourcing:

--Develop and enforce standard sourcing procedures company-wide;

--Hire sourcing and commodity expertise, including consultants;

--Improve access to and quality and analysis of corporate spending;

--Enlist executive support for resources and policy changes; and

--Leverage commercial sourcing management automation.

"Mid-size enterprises that used these strategic sourcing techniques recorded more than four times greater procurement cost savings, better supply performance, and greater profitability than industry peers," Minahan said.

This report benchmarks strategic sourcing processes, competencies, and systems infrastructures of mid-size enterprises. It identifies the practices and attributes of top-performing sourcing programs and provides a framework for estimating the operational and financial impacts of adopting such practices.

Download a complimentary copy of the report:

http://www.aberdeen.com/link/source.asp?cid=2501&pid=SS010406PR

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 serving them. For more information, visit www.aberdeen.com or call 617-723-7890.