Committing to strategic sourcing and general supply chain improvement can have impressive effects on companies' bottom lines and day-to-day effectiveness. There are complexities involved in embracing these new approaches, however. For instance, leaders don't always consider the supply chain's potential ability to generate business value. While strategic sourcing represents a philosophy based on bringing procurement into the high-level operations of an organization, getting to that point may be difficult for companies that have never made such commitment before.
Recognizing the current state of supply chain improvement, what is possible and which companies can get results is the first step to making changes that have time and financial value. Of course, this is complicated by the fact that potential useful offerings are constantly changing and evolving.
Becoming strategic today
Supply Chain Management contributor Gary Forger named the supply chain the "largest soft asset" possessed by any modern business, something that is poised for improvement. He framed the process of improving sourcing in terms of disruptive innovation: It's hard to recognize the breakthroughs that will truly change an industry until they are already occurring.
Forger noted that supply chain managers who want to ride innovation's waves instead of being crushed under them should make sure they keep an eye on new tech and strategies without losing sight of present operations. Focusing entirely on the future and trend-hopping runs the risk of employing processes that aren't ready to be helpful, while moving too slowly can lead to a company being left behind by competitors.
Each company will have slightly different needs. Proactive procurement officers are sensitive to ways to better meet those requirements, specifically through tech tools that are just becoming advanced - or affordable - enough to use. Forger suggested that companies need to figure out which of today's emerging trends have potential bottom line benefits. Harnessing those advancements and the resulting efficiency benefits will prove critical in changing with the times and not forfeiting the potential value of more efficient supply activity.
Strategic thinking in line with lean principles is one of the key concepts behind modern supply chain improvement and sourcing. According to IndustryWeek contributor Paul Myerson, recent McKinsey research backs up the strategic value of simplification and optimization. Companies that take time to design procurement operations based on real external and internal demand for products may find themselves operating far more efficiently than those that fail to study the end results of their efforts.
Myerson also noted the value of continuous improvement. Companies that add this lean virtue to their procurement operations could fare better over time than if they become too attached to a single status quo. With demand from customers and business units sure to change over time and new strategic tools always becoming available, it's easy to see how frequent assessments will turn up opportunities for improvement.
Strategic sourcing and improved procurement are practices that call for a marriage of technology and ideas. Companies can't expect to intelligently add the latest IT tools to their operations without the right mindset to find the value in these deployments.