Afternoon Coffee: Reducing supplier costs vs cutting jobs; Judge prevents TikTok ban in U.S.; Uber’s London license is restored

Companies that focus on reducing supplier costs can improve earnings, particularly EBIDTA numbers, by over twice as much as cutting jobs, according to new research from procurement consultancy Proxima.

The research, done in partnership with the Centre for Economics and Business Research, shows that FTSE 350 — the 350 companies with the highest market capitalization on the London Stock Exchange — would get a 27% boost in EBIDTA from a 10% cut in supplier spend. In comparison, companies would see a 12% increase from a 10% drop in workforce costs. The research showed the average supplier costs make up 70% of FTSE 350 companies’ total spend and 60% of their revenues.

The report found “significant” variation between sectors. Companies in industrial, consumer discretionary and consumer staples sectors have the highest supplier spend levels as a percentage of overall spend. They would likely benefit the most from spend reductions.

“Our research demonstrates the crucial importance of managing external supplier costs. At a time when many FTSE 350 companies have been buffeted by the impact of COVID-19 and are making tough choices about jobs, this shows that they should be treating supplier cost management as a strategic priority,” Proxima CEO Gareth Evans said in a press release. “Business leaders should be looking to supplier costs as a primary source of saving money and increasing flexibility. At a time when companies are seeking to reduce outgoings and create a more variable cost base — supplier costs are where the biggest impacts can be made.”

Federal judge blocks Trump administration's TikTok ban

A federal judge blocked the Trump administration’s ban of TikTok downloads in the U.S., buying the Chinese-owned social media app more time to get approval from U.S. and Chinese authorities for a pending deal that includes Oracle and Walmart, according to the Wall Street Journal.

The court ruled less than four hours before the ban was to take effect. President Donald Trump gave the Oracle-Walmart deal a preliminary blessing because of its addressing of national security concerns. However, the U.S. Committee on Foreign Investment must still approve particulars, especially who would have majority ownership, according to the article. The Chinese government could still nix the deal.

It is possible the U.S. government still bans the app as well. The U.S. Commerce Department plans Nov. 12 as the deadline to implement a full ban of the app, rendering it unusable for U.S. users if the American deal for TikTok isn’t completed by then. However, the courts could still side with the U.S. government and allow a ban to move forward, according to the article. For now, Americans can still use TikTok.

Judge restores Uber’s transportation license in London

A judge on Monday restored Uber’s transportation license in London — a key global market for the company — after regulators threatened to ban its cars from the roads over safety concerns, according to the New York Times.

Tan Ikram, a deputy chief magistrate, said Uber met a “fit and proper” standard to receive a license for 18 months after taking necessary steps to address regulators’ concerns, including adding safety measures to keep unauthorized or uninsured drivers from using the platform and carrying passengers. Uber has had up to 45,000 drivers on the road and provides millions of rides each month in London, according to court information obtained by the New York Times.

Uber has seen its London operating license pulled twice in the last three years over safety concerns, but it has been able to operate during appeals.

“This decision is a recognition of Uber’s commitment to safety, and we will continue to work constructively with Transport for London,” Jamie Heywood, Uber’s regional general manager for Northern and Eastern Europe, said in a statement. “There is nothing more important than the safety of the people who use the Uber app as we work together to keep London moving.”

Never miss out on Spend Matters news — sign up for our newsletter!

Share on Procurious

Discuss this:

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.