Abstract
In today's economy, companies are continuing the pursuit of competitive advantage to boost the value proposition of the goods and services they offer. One of the main thrusts of these efforts is cost reduction to facilitate offering more for less - a proposition sure to attract any consumer's attention. This search has led to a greater interest and focus on what goes on in the purchasing department. With an average of 50 percent or more of all revenue in a typical company going back to the suppliers, cost containment and reduction involves more than just getting a few quotes and buying from the lowest bidder. The introduction of total cost management for acquisition and source selection, based on strategic alignment to goals, is morphing the purchasing function into a broader based role known as procurement.

Inside every company there is a procurement opportunity that offers immediate savings, higher quality and gently improved profits. By focusing on procurement spending, companies can reduce the overall cost of materials by 12-15%. To achieve these savings, companies must develop a systematic approach to purchasing which involves aggressively managing product specifications and negotiations with suppliers. This approach also requires new capabilities and improved analytical skills.

This white paper explains how companies can be more competitive in today's changing environment. The need to be lean and the ability to think strategically are more important than ever. Development of a world class procurement contract management system will help realize procurement best practices that in turn will lead to significant cost savings and increased efficiency.

Author Sourav Kumar

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