High commodity prices as well as rising oil prices and transportation costs are undermining consumer goods companies’ ability to maintain margins. In part, this is a function of not having a true understanding of their total cost of ownership and its impact on the extended supply chain. Global sourcing is one part of the solution and is a viable solution for consumer products companies that are willing to invest in improving the core components of their procurement operations.
As companies look for next-generation cost saving opportunities most consumer products companies today are using procurement outsourcing to reduce non-core costs and increase the effectiveness of their procurement function.
Top consumer products companies reduced costs in the past through traditional one-time measures such as employee layoffs, plant closings and product price cuts. But with changing economic scenario, companies are looking for new ways to fund innovation and growth. Procurement outsourcing provides an important opportunity to further strengthen top and bottom line performance.