SOURCE: Aberdeen Group, a Harte-Hanks Company

June 06, 2007 11:45 ET

Living in a Material World: Direct Materials Sourcing

New Aberdeen Study Finds That Best-in-Class Enterprises Achieve 28% Higher Year-Over-Year Cost Reductions Than Their Peers

BOSTON, MA--(Marketwire - June 6, 2007) - 80% of enterprises cite cost reduction as the primary driver of their direct materials sourcing programs, according to a new report published by Aberdeen, a Harte-Hanks Company (NYSE: HHS).

"The Direct Materials Sourcing Benchmark Report" also reveals that while cost reduction is the top priority, sourcing programs that highly focus on process and collaboration that are most likely to achieve these savings. Leading sourcing groups engage product/design teams sooner in the process and show greater spend under management and superior savings as a result.

The new study found that Best-in-Class enterprises are blending technology solutions and strategic actions to enhance their direct materials sourcing programs to place almost all of their direct materials spend under management.

"Globalization has impacted direct materials sourcing groups as significantly as any in the enterprise. A majority of Best-in-Class sourcing organizations realize a seismic shift has occurred and extensively leverage strategic sourcing services to help them expand their supply base," said Andrew Bartolini, Director of Aberdeen's Global Supply Management research practice. "They are also much more likely to utilize advanced sourcing capabilities and other associated technologies like spend analysis, supplier performance management, and category management to achieve overall program success."

Best-in-Class enterprises report significant advantages from their direct materials sourcing programs, including:

--  28% higher year-over-year cost reductions
--  63% greater rates of contract compliance
--  70% greater likelihood to utilize e-sourcing and,
--  Nearly all (97%) have a formal direct materials sourcing program
    
Aberdeen recommends that enterprises develop a "portfolio management" approach to its direct materials spend and perform regular assessments to maintain a robust strategic sourcing pipeline. Enterprises should also utilize advanced sourcing strategies like "should cost" analysis and optimization-based sourcing analytics to enhance value-based sourcing decisions. The report also includes several compelling case studies from leading enterprises.

A complimentary copy of this report is made available due to the following underwriters: Ariba, CombineNet, and Aankhen Inc.

To download a complimentary copy of "Direct Materials Sourcing: Living in a Material World," please visit: http://www.aberdeen.com/link/sponsor.asp?cid=4088

About Aberdeen Group, a Harte-Hanks Company

Aberdeen is a leading provider of fact-based research and market intelligence that delivers demonstrable results. Having benchmarked more than 30,000 companies in the past two years, Aberdeen is uniquely positioned to educate users to action: driving market awareness, creating demand, enabling sales, and delivering meaningful return-on-investment analysis. As the trusted advisor to the global technology markets, corporations turn to Aberdeen™ for insights that drive decisions.

As a Harte-Hanks Company, Aberdeen plays a key role of putting content in context for the global direct and targeted marketing company. Aberdeen's analytical and independent view of the "customer optimization" process of Harte-Hanks (Information - Opportunity - Insight - Engagement - Interaction) extends the client value and accentuates the strategic role Harte-Hanks brings to the market. For additional information, visit Aberdeen http://www.aberdeen.com or call (617) 723-7890, or to learn more about Harte-Hanks, call (800) 456-9748 or go to http://www.harte-hanks.com.

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