New study reveals room to improve OpEx spending

New research from Globality has revealed the urgent need for organizations to combat inflationary pressures with autonomous sourcing technology to cut costs and reduce operating expenses (OpEx). 

The report titled “2023 Research Insights for CFOs” from enterprise AI company Globality found that 82% of procurement leaders say their indirect spend is not well-managed during the sourcing process, leaving substantial cost savings on the table. 

Meanwhile, Indirect spend is estimated to equal 20% to 40% of revenue, and is usually recorded under Selling, General and Administrative expenses (SG&A).  

In a typical Global 2000 company, this translates into costs amounting to billions of dollars that could easily have been optimised. Despite this, many organisations mistakenly assume that they have their indirect spend under control, whereas the actual situation is often very different.   

While finance executives are already struggling to keep a lid on rising costs, the study reveals that two-thirds of suppliers (68%) report increased demand for their offerings compared to the past year and nearly half (43%) are planning to increase prices in 2023.   

Meanwhile, the research revealed that 74% of the surveyed companies do not mandate competitive and transparent sourcing processes. This means that they are potentially overspending due to lack of supplier competition.  

“These findings highlight an important lesson that is constantly being ignored – that current procurement processes are archaic and inefficient,” said Joel Hyatt, Globality Co-Founder, Chairman and CEO.  

“The big legacy software companies have not invested in technological innovation for decades. With the new corporate imperative to cut costs and reduce OPEX, companies must implement proven autonomous technology that saves money on day one.”  

To address these findings, Globality suggests using autonomous sourcing software, which will drive cost-savings and mitigate risk.  

“The need to automate the sourcing process for indirect spend is clear. CFOs must prioritise sponsoring this transformation,” the study revealed.  

The findings are based on surveys of global procurement leaders and suppliers across a broad range of industries, including financial services, technology, pharmaceuticals and life sciences, telecommunications, consumer goods, and retail among others.