Purchasing magazine is running a good article about sourcing savings. It indicates that although strategic sourcing is such a powerful tool that help generate huge savings for companies on goods and services purchased, but not all of the anticipated savings agreed to in contracts are flowing down to the bottom line. Analyses show that less than half of their contracted sourcing savings are being captured in the bottom line.  The root cause is often found in the company’s purchasing processes –the compliance issues. Money is being lost due to gaps between the terms of purchasing contracts and the ways in which internal user groups actually make their purchases and stakeholder alignment strategies.

Leading companies have discovered that the most effective way to manage compliance around purchasing policies is to develop an online purchasing catalog system that allows employees to requisition products and services under terms from the master contract. Catalog implementation involves reducing complexity, deciding on the suppliers to be included in the catalogs, developing a rollout approach and engaging suppliers in the effort. There is a four-step approach to catalog development shared by the article that helps achieve powerful results.

• Step 1: Standardize Catalog Offerings
• Step 2: Segment Supplier Base
• Step 3: Develop a Rollout and Communications Approach
• Step 4: Implement and Involve Suppliers

Once catalogs are populated they streamline the entire procurement process. Full savings capture can be achieved, and it should become the rule rather than the exception.

If you want to learn more and read the entire articles, click here. http://www.purchasing.com/article/CA6545633.html

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This entry was posted on Sunday, April 20th, 2008 at 10:47 pm and is filed under Purchasing Practice, supply chain management, what's new. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.