Scale of Procurement Waste revealed as companies feel post-Brexit pain

London, UK (PRWEB UK) 27 July 2016

Companies in the UK must do more to tackle the £61bn a year lost through poor procurement if they are to survive and thrive at a time of UK, European and global economic uncertainty.

Research by international procurement specialists blur Group has revealed that £167m a day is lost in the UK due to procurement fraud, unmanaged contracts, maverick spending and inefficient internal management and delivery processes.

The scale of the problem is at a time when the UK economy is reported to be at its worst level since 2009, with economic indicators signalling a 0.4% contraction of the economy in the third quarter. The International Monetary Fund cut its growth forecast for the UK by 0.2 percentage points to 1.7%, and the EU Commission stating that the UK would, at best, grow by 1.1% in 2017, but with a risk that the economy could contract by 0.3%.*

One of the first in-depth post-Brexit business surveys, Deloitte's Chief Financial Officer (CFO) Q2 Survey**, has revealed that for the first time in more than a year, the top two balance sheet priorities for major UK corporates are defensive: reducing costs and increasing cash flow, with firms becoming more cautious about their spending.

Business sentiment has weakened significantly, with optimism dropping to the lowest level since the Deloitte survey started in 2007, lower than in the wake of the failure of Lehman Brothers in 2008. Some 47% of CFOs have rated cost reduction as a strong priority, the highest reading in three and a half years.

Similarly, KPMG's first EU Exit Impact Assessment Guide*** published in July puts financing, people, customers and supply chain as the four most important areas for UK businesses to focus on, with liquidity, funding and capital structure as the biggest risks.

Philip Letts, CEO of blur Group, said: "Post-Brexit the leading issues for CEOs and CFOs are cost reduction and cash optimisation, yet £61bn a year is being wasted through poor procurement practice. So why aren't our business leaders dealing with the problem? We hear about halting investment and recruitment but who is saying we need to annihilate procurement waste?

"Brexit is the new reality, with volatile markets, profit warnings from major players in key sectors and a rapid tightening of investment. Businesses face potential upheaval with their customers, partners and suppliers because of currency changes and potential new tariff barriers. There is a long and uncertain road ahead as trade deals start to be negotiated between the UK and other governments, and businesses will retain a cautionary approach for the foreseeable future.

"At a time when so much is occurring at a macro level beyond the control of individual organisations, it is imperative that companies finally start to make progress in an area of spend that is very much within their control. Research by the likes of KPMG, Accenture and ourselves shows that savings of up to 30% can be achieved without impacting the quality of services delivered.

"Business leaders are already taking a very cautious view on potential costs, yet in their approach to optimise cash, they are overlooking the millions of pounds being wasted through poor procurement practices within the companies they are responsible for every day. It is wrong and wasteful to slash investment, start limiting recruitment, reduce staffing levels and pull projects without also tackling the inefficient procurement processes that businesses ought to fully control."

Tackling procurement waste in purchasing of any business expense is fast rising up the corporate agenda, as recent reports by Accenture and EY reveal its scale and the specific areas where waste is most prevalent. As blur Group's white paper 'Identifying and Overcoming Procurement Waste' sets out, a key area is indirect spend - the purchasing of business services such as marketing services, IT, professional services and property management.

Poor practice that leads to waste can range from use of unapproved suppliers, verbal agreements, poor planning, lack of managed contracts, inefficient tendering processes, limited visibility on contracts and procurement fraud including bid rigging, collusion, conflicts of interest, false invoices and kickbacks on payments.

Philip Letts said: "This area of business spend management is set for rapid change. We are already seeing the most sophisticated global enterprises achieve savings through improved management of their day to day spend and are finding this approach a successful alternative to slashing other areas of their business. They are adopting smarter use of spend analytics, accessing shared online marketplaces to buy business services and implementing robust competitive bidding structures.

"But we are determined to shine the spotlight on the all too common poor practice that continues within most organisations because the opportunities are there to stamp it out. Every new market report that is published brings further clarity on the scale of the problem and the permanent level of savings that can be achieved when organisations access the technology that allows them to achieve improved efficiency, greater savings, heightened transparency and better results."

Download a copy of blur Group's 'Identifying and Overcoming Procurement Waste'.

ENDS

Photo Caption: Philip Letts, CEO, blur Group

White Paper
The research commissioned by blur Group included a review of information and data from global experts, including the Association of Certified Fraud Examiners (ACFE), Price Waterhouse Cooper (PwC), BearingPoint, SciQuest, and other leading intelligence providers, to identify the prominent causes of procurement waste.

Download a copy of blur Group's white paper 'Identifying and Overcoming Procurement Waste'.
https://www.blurgroup.com/procurement-waste/

*http://www.bbc.co.uk/news/business-36864273
http://www.telegraph.co.uk/business/2016/07/19/imf-slashes-uk-growth-forecasts-after-brexit---but-britain-will/
http://ec.europa.eu/economy_finance/publications/eeip/ip032_en.htm

**Deloitte Survey July 2016
http://www2.deloitte.com/uk/en/pages/finance/articles/deloitte-cfo-survey.html

***KPMG's first EU Exit Impact Assessment Guide, July 2016 https://home.kpmg.com/uk/en/home/campaigns/2016/06/brexit.html

Notes to editors

blur Group's Enterprise Services Platform improves procurement ROI by reducing costs, optimizing spend and eliminating the waste and inefficiency inherent in purchasing business services. Its unique cloud software & managed services platform provides a transparent, simple way of sourcing, managing and delivering services.

Companies in both public and private sectors use blur Group's Platform to better manage purchasing processes and immediately address key procurement challenges within indirect spend, supplier relationships and ecosystem management. Strategic sourcing, SOW creation, project management and payment processing become manageable through one single system.

Leading multi-nationals including Solvay, Argos and Danone trust blur Group's global marketplace of over 65,000 vetted service providers to effectively deliver their business services. With 11 service categories and over 200 project types, blur Group helps these companies streamline their delivery systems, optimise spend and generate a better ROI across their business, creating up to 30% savings through more efficient delivery.

Formed during the 2008/9 global crash, blur Group adopted a lean 'size zero enterprise' approach as an organisation itself. Now operating a global procurement platform, it provides business advice on the 'Size Zero Enterprise', including online at blurgroup.com and in two business strategy books 'The Road to Zero' and 'Doing More with Less: A Guide to the Size Zero Enterprise'.

The theory behind the 'Size Zero Enterprise' sets out a clear 10-step strategic approach to spend management focusing on key initiatives including the removal of inefficiencies across all areas of a business, adoption of innovative technologies, implementation of right-sourcing and smart ecosystem management, zero-based budgeting and the elimination of wasteful spending across all departments.

Read the full story at http://www.prweb.com/releases/2016/07/prweb13576304.htm

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