Reducing Business Services Costs

Research by ScottMadden indicates that business services represent from 40% to 76% of non-fuel spending at North American electric & gas utilities. Despite the sheer volume of this spend, most utility procurement departments are not managing business service spend with the same degree of oversight and care exercised with respect to products and materials. Applying supply chain management practices to services procurement typically results in savings ranging from 4% to 8% of total services spend. At the low end, this translates to an increase in operating income of between 5% and 9% for most utilities and an even greater impact on corporate earnings and market valuation. Read more.