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How suppliers have changed Dutch management practices

Proxima
Aug 15, 2013 9:19:00 AM

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suppliers impact on dutch business

To better understand the implications and opportunities of our latest research into the spending habits (and subsequent management practices around these habits) of modern day Dutch businesses, we have compared labor and non-labor (supplier) costs across the Dutch AEX25 over a two year period.

Dutch AEX25 cost comparison

Labor vs nonlabor resized 600
Click image to enlarge


As seen in the above table, all organizations included in the study have a higher non-labor cost base than they do labor cost base:

  • Wolters Kluwer and Reed Elsevier have similar proportions – which highlights the sector bias in these metrics. As publishing businesses, their core product (intellectual property) is generated by their own people
  • The remaining 19 organizations show a significantly greater share for non-labor costs

With such an overwhelming majority of operating activities now being incurred outside the business (often in extended supply chains with little transparency), several areas of business management are materially affected, across all sectors:

Corporate governance and risk

Business leaders now need greater assurance that activities in their extended, and more complex, supply chains are regulated, and any risk is assessed and minimized. How are you ensuring you avoid a horse-meat scandal in your supply chain?

Profit improvement

Suppliers are now a major driver of income. Managing them, however is significantly different to managing your own employees e.g. cutting headcount not only has limited financial benefits, but can also diminish overall morale, agility and productivity. How do you measure contributions to income and growth (outside of savings) –and shareholder value?

Innovation and intellectual property

The source of innovation has shifted from in-house to supplier led. There’s a far greater need for clarity over intellectual property (IP) – and who owns it. Who owns the innovation agenda in your company? How do you support or manage suppliers inline with this agenda?

These three areas are critical for any large business, and discussed regularly at board level.

But, to what extent are they being integrated with overall supply management strategies?
Proxima research | New rules of cost management

 Jeroen Huisman

 

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