Organizations that have implemented supply base management programs often
reap a 5 to 10 percent reduction in the spend base addressed.
Depending on how
aggressively a buy is managed at the time of program implementation, savings of
15 to 20 percent are not unrealistic. By putting measurements and processes in
place, organizations can realize a 3 to 5 percent reduction on a year-over-year
basis. These savings in turn can lead to a decrease in COGS, working capital and,
potentially, SG&A. Improvements in operational performance yield additional
savings as well as enhanced asset utilization. These programs yield powerful
results and can be equally effective for both direct and indirect spending.