Cost Reduction Benchmarks
The conventional wisdom is that procurement should focus principally on the “big ticket” areas of spend, such as raw materials and energy. And, you certainly should devote attention to them — not just to reduce costs, but also to reduce volatility through better risk management.
But, if you focus only on the big-ticket-spend categories, you’ll be missing out on the enormous opportunities presented by indirect areas of spend, where it is often possible to achieve double-digit reductions in costs.
The bottom line is this: focus on both direct and indirect spend. Doing so can have a powerful effect on corporate performance.
Cost Reduction Benchmarks
Source: Various benchmarks, Greybeard Advisors experience database
