Suppliers, with their broad knowledge of and experience in different markets, arguably can see opportunities that those within an organization may miss, and CPOs should be encouraging them to at least report those opportunities.
Lost in all the hubbub last week about Apple’s decision to bring some manufacturing jobs back to the US, was a much smaller and more local supply chain story, one involving the local restaurant industry in Boston. The stories are vastly different in content, scope, impact, and importance. But taken together, they illustrate an important lesson: regardless of company size, the way procurement manages total-cost-of ownership (TCO) evaluation and buyer-supplier communication can determine whether supply chains are a competitive advantage or disadvantage.
In theory, risk management seems such a simple concept. When discussed in the abstract, it lends itself to all sorts of platitudinal phrases, like “pre-planning,” whatever that means. But when a risk turns into an actual event, the platitudes become imperatives, and how well you and your suppliers planned beforehand and respond can determine the survival of your business. American Airlines’ actions before and during the recent Hurricane Sandy provide a great role model for how exceptional supplier relationship management can turn risk-management theory into practice.
I wrote recently about the importance of paying suppliers on time, or, at least not burdening suppliers by extending days payable to dangerous lengths. Understanding the payment schedule better, however, means taking a closer look at the buyer-supplier relationship.
I have been thinking lately about a comment made by a supply chain executive at a Procurement Leaders Roundtable in Brazil. When asked how he incentivises suppliers and encourages them to be innovative, Joseph Reiner, who heads procurement at Mars Brasil Petcare, said: "We pay them on time."
Recently, in a conversation with a group of procurement professionals who were discussing the future of the profession, I asked how many of them practiced category management or category knowledge management, the institutionalizing of the lessons and best practices from the process throughout their companies.
Have you ever heard the term “Skunk Works?” If you are at all familiar with the history of military aircraft, you know that it originated at the former Lockheed Aircraft Corp. (now Lockheed Martin) in the 1940s. The concept behind the term could be another key to unlocking the value procurement can bring to a company.
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