Procurement costs must be cut as corporate spending dips

If figures from Cisco Systems and IBM are any indication, the corporate spending that has driven the economic recovery in the United States could be headed for a slowdown.

Corporate investment is one of the few remaining sources of growth in the economic sector, as unemployment remains at its highest point in decades and government stimulus measures are quickly being drained of funding. According to President Barack Obama, 72 percent of the $862 billion stimulus program funds have been spent or obligated. The unemployment rate has remained steady at 9.5 percent.

"It's been business investment, particularly technology, that's been in the driver's seat" of economic recovery, said Stuart Hoffman, chief economist at PNC Financial Services in Pittsburgh. "Unless something else picks up the pace, it means the outlook for the economy is going to be that much dimmer."

Continuing the popular car metaphor, John Chambers, CEO of Cisco, told Bloomberg in a television interview that when high-level executives see mixed economic signals, "they're a little bit slower to put their foot down on the gas pedal, and they pick their foot off the gas pedal a little bit faster."

The decrease in spending means that companies will need to put more effort into sourcing their product components in a cost-efficient way. Cutting supply chain and procurement costs is one of the quickest and most effective ways that corporations can reduce costs and stretch available funds further.