To Benefit the Enterprise, Find Forward-looking Suppliers

This is an excerpt of the original article. It was written for the January-February 2015 edition of Supply Chain Management Review. The full article is available to current subscribers.

January-February 2015

As long as there have been boats and beasts of burden, intrepid business professionals, governments, and marauders have sought fame, fortune, wealth, and value by going global. Think the Phoenicians, Marco Polo, and the Vikings in days of old. Or in contemporary times, think of China, BRIC, EMEA, and other emerging markets. One could argue that outsourcing to China a few decades ago gave birth to supply chain management as we think of it today. This month we’re including an online bonus column from APQC. While this issue focuses on global management, we didn’t want to miss out on the column.

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Many organizations recognize that procurement can provide the business with much more than simply getting the lowest cost for purchased materials and services. They see tremendous potential when the procurement function is aligned with the strategies and goals of other business units as well as the enterprise as a whole. This can take the form of involving other business groups in the selection and appraisal of suppliers, as well as selecting suppliers that can best meet the strategic needs of the organization. The question is whether organizations are taking steps to realize that potential.

According to APQC’s Open Standards Benchmarking in procurement, organizations involve a variety of groups in the selection and appraisal of suppliers, from marketing and sales to the logistics function, depending on the needs of the organization. However, APQC’s data also shows that organizations most often involve the R&D/engineering group and manufacturing group in this process. About 60 percent of organizations involve the R&D group in supplier selection and appraisal, and just over 56 percent of organizations involve the manufacturing group.

These results indicate that organizations are aiming to use procurement to meet the broader needs of the organization. By including functions involved in the design and manufacturing of their products, organizations can make sure that the materials purchased by the procurement function provide the best value with respect to cost, design, functionality, and suitability for their manufacturing processes.

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