Last week Deutsche Post DHL revealed their strategy for 2015 and one of the key components in the strategy is a program called IndEx which aims to take at least 1 billion euros out of 7 billion euros in indirect costs at the corporate functions and the Corporate Divisions. According to DP-DHL more than 150 initiatives totalling more than 800 million euros have been identified to contribute to the overall goal; while some are strictly process centric, others are clearly tied to purchasing activities including the outsourcing of the European telecommunications services to Telefónica and reduction in travel and entertainment costs.
The IndEx program aim is to save 15 percent annually which by any means is an ambitious target; but fact is that many purchasing functions are pressured with delivering savings not far from this range.
During our recent Sourcing in a Downturn webinar we asked the participants about their savings targets; and how these had changed vs. the targets set for 2008.
- 48 percent had savings targets that exceeded 5 percent
- 36 percent had savings targets between 0 to 5 percent
- 13 percent had no change in 2009 vs. 2008
- 3 percent had decreased for 2009
With many companies downsizing across the board; these numbers are quite challenging. One way to actually come around with these numbers can be to see if there are internal resources that can support the purchasing function in delivering the savings. Recently we’ve seen organizations that have decreased their product introduction pace in order to free up resources that can be handed over to the sourcing department. These additional resources are then used to support in capture saving; approving new suppliers, changing and easing up specifications and focusing on new sourcing areas.
March 20, 2009 at 10:17 pm
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