How will the critical business function of procurement evolve in our increasingly complex global sourcing landscape?
- First, coaches are expected to act ethically in the best interest of their players. By improving the individual and helping them become the best, the entire team (for example, the supply chain) benefits.
- Second, coaches must recruit and select the best players from a larger population. “Best” in this case means those that have strategic capabilities, a collaborative attitude, and act with passion and trust.
- Third, coaches must often dedicate their time to those players on the ‘first string’. Organizations may have thousands of suppliers, but only a handful of these are strategic and merit attention. There will always be suppliers that are “carry-overs” from prior product histories, or were included at one time when the competitive environment was different. Supplier management involves knowing which suppliers to keep and which to develop.
- Coaches must understand the competition and help their players understand what they must do to win. As such, organizations need to continually push their suppliers to improve, hone their skills, influence technology road maps, and drive operational excellence in every dimension of their performance
- As procurement matures, sources of supplier-led innovation will become more of a value driver than it is today.
- There is a need to build stronger relationships to tie procurement and R&D together, so they can align activities. Procurement is now part of every business unit, driving more end-to-end ownership of the process.
- Management begins with CEOs and EVPs from the buyer and seller knowing one another, then down to the director level, and finally down to the operational level.
- When there is complete openness and understanding at all levels, you have achieved a virtual company.
- Pricing negotiation is no longer needed, as costing is based on should-costs driving the competitive position, understanding what profit margins are needed, and working together to achieve these goals.