For most firms, the single biggest cost category is the total spend with providers. Nevertheless, figuring out the best way to identify the best places for supply economies - and then report and how to measure them - presents important confrontations. Both overstatement and understatement of supply savings disparities indicate the erroneous reality, resulting in an overemphasis on low-yielding cost saving initiatives, misdirected workers and corporate resources being rewarded for the wrong behaviour. Additionally, supply savings gaps conceal the strategic contribution providers can provide.
The authors identified an assortment of measurement and reporting practices for supply savings in studying the supply management practices at 30 large North American and European firms. They reason that there are often differences between reality and reported economies and that right measurement of supply savings is nearly impossible. They investigate why differences exist, what practices lead to under- and overstatement of economies, the consequences of poor supply economies measurement and what can be done to understand supply economies disparities.
PUBLICATION DATE: January 01, 2010 PRODUCT #: SMR336-PDF-ENG
Minding the Supply Savings Gaps Case Study Solution
This is just an excerpt. This case is about FINANCE & ACCOUNTING
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