Superior supplier management is a lifeline
The value of effective supplier management to organisations has been brought starkly into focus by the experiences of the last two years. What has been revealed is that supplier management has been and continues to be a lifeline in uncertain times.
Much of what has transpired in the last 2.5 years will drive permanent change, and supply chain management is no exception. We are entering a new phase where the complacency from a period of stability has been disrupted. A global pandemic, conflict, geo-political uncertainty and trade tensions have all been a wake-up call. What has emerged is an opportunity for the best and brightest in procurement and supply chain management to rewrite the internal script and place supplier management at the heart of value protection and creation. Since its inception in 2009, this report has examined what organisations regard as their value objectives, and how supplier management has been aligning itself to deliver these. Cost management (reduction and avoidance) and effective risk management have vied for the top spot in terms of business drivers over the years, usually followed closely by supplier innovation. Recent experience has taught us the value of risk management, and that is a far more nuanced term than previously thought. And in fact, rather than a stand-alone discipline, it should permeate and be integrated into all phases of the procurement lifecycle and be used to build supply chain resilience. As procurement increasingly engages with the business earlier in the procurement lifecycle to discuss category strategies, the case for creating supply chains that are not only cost-effective but resilient needs to be made. Ask any organisation that has weathered the storm over the last three years about the value of a resilient supply chain.
The value proposition for supplier management now has new and important elements that are high up on the executive agenda, namely supply chain resilience and continuity. The apparent reduction in direct financial benefits being reported is no doubt the result of a shift in focus from cost to managing supply chain disruption. The trick will be to learn and apply the lessons to create less vulnerable and more resilient supply chains, get these embedded and then get back to driving cost efficiency in stronger partnerships with suppliers. The key opportunities to drive more value are:. • Broaden the business understanding of supplier management value by being more inclusive and specific in terms of the opportunities and initiatives that can be undertaken with suppliers to address specific business problems. • Follow the good practice established by Leaders in ‘always’ having a robust business case for supplier management. • “Keep score”, develop simple and effective processes (using technology) to track both direct and indirect financial benefits. • Get better alignment between business drivers and supplier management outcomes by ‘working’ the business driver with the business and suppliers and getting a better focus for your supplier management programme.
in uncertain times.
Mitigate risks and raise resilience with a robust business case for Supplier Management. Listen to “How to build a Supplier Management Business Case”.
A global pandemic, conflict, geo-political uncertainty and trade tensions have all been a wake-up call.
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