StrategicSource Blog

The go-to blog for spend management best practices, that provides articles and videos on achieving cost savings and managing suppliers, as well as insights into how to be the most effective purchasing department for your business. 

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Implement an Effective Spend Management Function

The implementation of a spend management vision – a dedicated function within an organization is very common in most large organizations.  The management of direct and indirect expense are considered an important and strategic role that has a material impact on profitability performance, and efficiency.  Organizations with a defined and well-managed spend management or purchasing function are typically centralized and provide several measurable benefits to their organizations including:
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Diseconomies of Scale: New Normal for Many Growing – Decentralized Groups

I see countless examples of significant diseconomies of scale in growing, decentralized groups. Based on my early management experience in airline, manufacturing and retail and continuing on today in our Spend Management practice, I believe that centralized management structures as it relates to staff functions such as HR, Purchasing, and IT perform better, more efficiently and more cost effectively than the decentralized organization structures that are common today.
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