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Missed Opportunities in Supply Management

While manufacturing companies have discovered the value supply management can add to their organizations, too many service-based companies see procurement as a back office, support function. The result is missed opportunities to reduce costs and improve service.

By ·

Over the last few decades, manufacturers have caught on to the value proposition that a disciplined supply management program brings to an organization. The best manufacturers leverage supply management to deliver benefits such as lower priced goods and services while gaining early access to innovative new products and technologies that will improve their products and increase shareholder value.

In those companies, supply management—a term we use interchangeably with the terms sourcing, purchasing, and procurement—is no longer focused just on getting the right product at the right price at the right time; instead, these manufacturers nurture their supply base to become their suppliers’ customer of choice and an indispensable business partner, one who can help them deliver a sustainable competitive advantage.

The story is quite different when it comes to non-manufacturing and service-based companies, or NMSBCs. While they do not produce a product for which costs can be directly tracked and correlated, NMSBCs can track the impact of supply management in their operating margins and net profits if they so choose. Yet, most NMSBCs have not yet fully realized the same supply management potential within their organizations as their manufacturing counterparts. 

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By ·
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Over the last few decades, manufacturers have caught on to the value proposition that a disciplined supply management program brings to an organization. The best manufacturers leverage supply management to deliver benefits such as lower priced goods and services while gaining early access to innovative new products and technologies that will improve their products and increase shareholder value.

In those companies, supply management—a term we use interchangeably with the terms sourcing, purchasing, and procurement—is no longer focused just on getting the right product at the right price at the right time; instead, these manufacturers nurture their supply base to become their suppliers’ customer of choice and an indispensable business partner, one who can help them deliver a sustainable competitive advantage.

The story is quite different when it comes to non-manufacturing and service-based companies, or NMSBCs. While they do not produce a product for which costs can be directly tracked and correlated, NMSBCs can track the impact of supply management in their operating margins and net profits if they so choose. Yet, most NMSBCs have not yet fully realized the same supply management potential within their organizations as their manufacturing counterparts.

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