Value of Procurement Functions

Most well run organizations often have a need to justify the value of each group and function relative to its return. World class organizations clearly have the same need. And since we are interested in Procurement, we've come to understand the best organizations usually have a Procurement Operation Expense (“POE”) of less than 1% of total spend.

It is also generally understood that in such world class organizations, Cost reduction savings (“CRS”) is around the 2% mark of total spend. A number of white papers have established these figures and can be verified with little effort. That means most Procurement organizations are generating profit for the business.

We at NaaSive have a strong belief in the value of the Procurement function. We have been able to help many to achieve even greater returns by negotiating on their behalf with vendors and helping them manage these partner relationships even better.