Since 2006, more than 20 per cent of top-tier US consumer products (CP) companies including Unilever, Kimberly-Clark, Sara Lee and Chiquita have signed procurement outsourcing agreements in an effort to reduce indirect costs, drive bottom line improvements or reinvest to drive growth, it has been claimed.
Procurement outsourcing firm ICG Commerce, which compiled the estimate, predicts that adoption of procurement outsourcing is poised to accelerate in 2010.
“Based on increased pressure to quickly meet changing business demands, CP companies continue to be the leading adopters of procurement outsourcing,” said Rachael Stormonth, senior vice-president at Nelson-Hall, a leading Business Process Outsourcing (BPO) research firm.
“Companies such as Unilever, Kimberly-Clark, Sara Lee and Chiquita are using procurement outsourcing to reduce non-core costs and increase the effectiveness of their procurement function.”
“In 2010, the ability to drive earnings per share improvements continues to be a challenge with a short list of solutions,” added Jon Feeney, managing director research, Consumer Research Group, Janney Montgomery Scott LLC.
“Those companies who focus aggressively on productivity will be most successful. I have seen a number of CP companies implementing strategies involving procurement outsourcing to improve productivity and reduce costs and expect this trend to continue.”
According to ICG, for most of 2009, consumer products leaders reduced costs through traditional one-time measures such as employee layoffs, plant closings and product price cuts. In 2010, even with economic conditions stabilising, companies are looking for new ways to fund innovation and growth.
“CP executives’ primary focus has traditionally centred around the consumer-facing side of the business, and especially of late, understanding changing consumer behaviors with the downturn,” said Manly Molpus, a member of ICG Commerce’s CP Executive Advisory Board.
“More recently, leaders are stepping back to look at the overall business from top to bottom, with a focus on costs too — and procurement outsourcing represents an important opportunity to improve operations and optimize spending.”
Source:http://www.procurementleaders.com/news/latestnews/1406-unliver-proc-outsourcing/
