Of the "10 Supply Chain Concerns for 2011"… 5 Are Clearly in Procurement's New Wheelhouse (Part 1)

Over on Supply Chain Digital, I came across a recent post quoting the study highlights from a consultancy, Crimson & Co, examining the top ten supply chain concerns of 2011. Curiously enough, we count at least five that are clearly in procurement's wheelhouse today. These areas are either jointly or increasingly owned by global procurement -- rather than operations -- teams. Without further ado, the "top ten issues ranked in order of frequency of occurrence" are:

  • Inventory Management and Planning
  • Demand Management and Forecasting
  • Supply Chain Network Optimization
  • Supply Chain Segmentation
  • Training and Development
  • Supply Chain Risk Management
  • Sales and Operations Planning
  • Performance Improvements in Warehouses and RDC's
  • Material Purchase Price Reductions
  • Green Supply Chains

See if you can guess which of these Spend Matters believes are going the way of procurement (inclusive of procurement and finance collaboration) inside many companies. In Part 2 of this post, we'll share our thoughts in more detail. But for now, we'll leave you with a teaser from a recent talk presented by Spend Matters' Jason Busch and MetalMiner's Lisa Reisman at a joint APICS and ISM dinner about how, more generally speaking, procurement and supply chain issues and priorities don't need to be in opposition to each other. In fact, by focusing on an expanded definition of lean, including what we term "lean sourcing," both groups stand to benefit.

By definition, we note that lean purchasing typically relates to creating purchase process efficiencies by eliminating wasteful steps in the purchasing process. According to MIT's Production Design System Laboratory, Lean Manufacturing relates to the elimination of waste in every area of production including customer relations, product design, supplier networks and factory management. "Its goal is to incorporate less human effort, less inventory, less time to develop products, and less space to become highly responsive to customer demand while producing top quality products in the most efficient and economical manner possible." Yet we believe that lean sourcing neither focuses on the specific purchasing process steps or the elimination of waste in the production process but rather relates to the elimination of waste in identifying, negotiating and awarding supply contracts. It requires organizations to consider and weigh all factors, when making sourcing decisions that effect total enterprise cost."

So is lean sourcing procurement taking over supply chain or supply chain taking over procurement? I'd argue the former...stay tuned!

Jason Busch

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