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How They Did It: American Casino’s Winning Strategy

American Casino and Entertainment Properties embraced supply management principles for three of its most critical service supply items. The result has been a win-win for ACEP and its suppliers—generating millions in savings.
By Heather Monteiro and Kevin Ball
Heather Monteiro, Ph.D. is a visiting faculty member at the University of Nevada, Las Vegas in the Marketing and International Business Department. She can be reached at .(JavaScript must be enabled to view this email address). Kevin Ball is corporate vice president of strategic sourcing for American Casino and Entertainment Properties. He can be reached at .(JavaScript must be enabled to view this email address).
December 6, 2016

Supply chain management (SCM) has long been promoted by manufacturers as a way to reduce costs, improve value, and create mutual benefit, higher commitment and long-term viability. However, most organizations in the service sector have been slow to embrace the principles of supply chain management, especially when it comes to the procurement of goods and services. As a result, they leave money on the table by neglecting the numerous benefits that can accrue from carefully managing the supply chain.

In many service industries, procurement is the dominant paradigm for purchasing the items that are critical to delivering the services that define their businesses. But procurement is transactional: Rather than creating mutual benefit, a purchasing agent buys goods directly from a supplier, frequently on a low-cost basis, with little to no consideration to what happens down the supply chain beyond that direct supplier. In that model, negotiations, goods and money move solely between the supplier and the buyer.

SCM involves looking beyond that supplier to managing relationships and product flow with other members of the supply chain such as distributors, manufacturers and transportation providers. In SCM, negotiations, goods and money may move between various parties within the supply chain and not just the buyer and supplier. Incorporating principles of SCM in service supply relationships can increase the quality of the supply, reduce the risk of supply disruption and lower the total cost of materials.

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Download Article PDF

Supply chain management (SCM) has long been promoted by manufacturers as a way to reduce costs, improve value, and create mutual benefit, higher commitment and long-term viability. However, most organizations in the service sector have been slow to embrace the principles of supply chain management, especially when it comes to the procurement of goods and services. As a result, they leave money on the table by neglecting the numerous benefits that can accrue from carefully managing the supply chain.

In many service industries, procurement is the dominant paradigm for purchasing the items that are critical to delivering the services that define their businesses. But procurement is transactional: Rather than creating mutual benefit, a purchasing agent buys goods directly from a supplier, frequently on a low-cost basis, with little to no consideration to what happens down the supply chain beyond that direct supplier. In that model, negotiations, goods and money move solely between the supplier and the buyer.

SCM involves looking beyond that supplier to managing relationships and product flow with other members of the supply chain such as distributors, manufacturers and transportation providers. In SCM, negotiations, goods and money may move between various parties within the supply chain and not just the buyer and supplier. Incorporating principles of SCM in service supply relationships can increase the quality of the supply, reduce the risk of supply disruption and lower the total cost of materials.

SUBSCRIBERS: Click here to download PDF of the full article.

 


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