The nature of what a ‘company’ is has changed dramatically. 25 years ago what was a labor cost is now a supplier invoice.
Our study shows that 70% of the average company’s revenue is now spent with third parties, compared to only 12.5% spent on labor costs. In short, supplier relationships help define the modern company. And smarter management of the cost base can significantly improve business performance.
As our study suggests, management that neglects the strategic aspects of their supplier base, or fails to maximize its value, risks missing out on developing competitive advantage and delivering long term shareholder value.