Giving sourcing and procurement the recognition it needs and deserves

global-sourcingIn a recent think tank meeting of top supply chain managers, drawn from a cross section of industries and tasked with reviewing the most important challenges facing today’s supply chains, and sourcing and procurement in particular, the most important consideration for the future, was deemed to be having the right people in the right positions at the top of the various supply chains with a place at the boardroom table.

The meetings participants were a 15 strong selection of supply chain leaders representing a number of industries including: auction houses, the automotive industry, the chemical industry, the clothing industry, the healthcare industry, high tech manufacturing, and oil and gas producers. All were given the same question.  How should their businesses best prepare for the challenges that the future of sourcing and procurement within the supply chain industry will bring.

3 Different Perspectives

Meeting members were asked to consider this question from 3 different perspectives:

  • People
  • Processes
  • Tools

With these 3 main areas of focus, the attendees were asked to determine the key attributes that each area needed to be equipped with, in order to make their businesses more responsive, more flexible, and faster in terms of reacting to a changing business and economic environment.

Resistance to change must be overcome

One of the attendees noted how their own business model was constantly changing in terms of the way they design, the way they sell, the way that revenues change, and the way that the market. All of these things reflect on the way that sourcing and procurement has to flex in order to react to changing circumstances. And yet knowing that change is essential there is always a certain amount of resistance to any proposed changes, and this must be overcome.

What is becoming more and more apparent is that the companies that are not very good at embracing change will suffer. The companies that are best prepared to embrace change right the way through the supply chain, including sourcing and procurement, are the companies who will be best positioned in the future.

It was unanimously agreed by all attendees that the most important thing for any company in terms of being prepared to best handle change, was the transparency of that company’s staff in all disciplines, including sourcing and procurement. It was further agreed that business leaders must be able to exhibit the necessary leadership.

The way that current business leadership behaves was almost inconceivable to their forerunners. It is all part of that natural resistance to future change. But the advantages of that very change are clear for all to see. The current trend of sourcing and procurement on a global scale is only possible because of the changes that have been brought about in supply chain theory, management, and of course software and programs.

Even the way that leaders communicate change to others must change. An example was made of the recent use of social media as a medium for communicating change.

The changes to Processes

The changes currently being implemented (especially in the field of technology) include such things as 3-D printing, social media, and Big Data, all of which are seen at the moment as being potentially disruptive. However there was widespread agreement that the way change will continue in the future is at this moment shrouded in fog.

It was pointed out at the meeting that many of these new innovations are still at their formative stages; things like 2-D modeling and 3-D printing. At this point in time these new technologies are disjointed and disassociated. But in the near future they will be brought together into a more cohesive force, which will in turn lead to some seriously disruptive changes taking place affecting all aspects of supply chain including sourcing and procurement.

The Changes to Tools must be reflected by the Changes in Leadership

The tools that relate to sourcing and procurement are embedded in supply chain management programming. After discussion, the meetings attendees all agreed that the most important factor here was visibility of process. The same visibility and transparency must also be evident in business leadership and supply chain leaders. With complete visibility, any new tools can then be put to best use in terms of enabling business leaders and business organizations to be able to respond rapidly to any new challenge.

Lack of visibility results in loss of revenue

One particular case in point with regard to the visibility and transparency of processes was highlighted by one of the attendees whose business set about using apps on their Smartphones instead of printed catalogues. This was all well and good in terms of their European and North American markets where the technology has been accepted and embraced. But the fastest growing market for this particular manufacturer was Asia.

Unfortunately little consideration had been given to this new market. The value of the market was rapidly expanding to compete with that of Europe and North America. But, it was not realized that the current lack of technology in the Asian markets meant that it took five hours to download the app to a Smartphone. This resulted in a halving of revenue from the Asian market, purely and simply because Apple didn’t work very well at the time in Asia.

Recognizing the importance of sourcing and procurement

If sourcing and procurement is to continue to adapt and change to meet current and future challenges it was unanimous unanimously agreed that processes must be carefully reviewed across all departments and disciplines, particularly supply chain. In fact the importance of supply chain leaders being sat at the boardroom table was emphasized. In many industries and businesses, the supply chain function answers to finance and is sometimes not even awarded the same status as either HR or IT.

If sourcing and procurement is to be given the recognition and tools to meet the challenges coming up; that has to change. More organizations need to follow the lead given by other more progressive, forward looking businesses, and place supply chain leaders at board level.

Do you believe that supply chain leaders should be employed at director level? Why is it so important and what are the sourcing and procurement benefits that stand to be gained if they are? Have your say at the feedback section below.

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