Of the “10 Supply Chain Concerns for 2011”…5 Are Clearly in Procurement’s New Wheelhouse (Part 2)

In the first post in this series, we shared the "10 top supply chain concerns for 2011" according to one consultancy which conducted some survey work on the subject. Of these, we'd argue that five are actually procurement-centric (encompassing direct materials spend, mind you) issues. These include supply chain network optimization (even more important today given the advanced sourcing capability we now have for direct spend, leveraging optimization technology), supply chain segmentation, supply chain risk management, material purchase price reduction and green supply chains. Among these concerns, we believe that supply chain risk management is actually more of a procurement and finance-led initiative than an operation one (increasingly, finance is seizing the reigns here, often staffing the executive role in charge of the area with a former procurement or supply chain resource). And the others are often falling into procurement's wheelhouse as well.

But here at MetalMiner and Spend Matters, we argue that where a functional priority or concern falls is less important than the collaboration between procurement and supply chain and the actual intersection of the two functions. Here, we believe a concept we've used for close to five years now is most appropriate -- lean sourcing -- a practice that truly merges supply chain and procurement tenants and goals together.

For procurement, we often observe four primary benefits of bringing lean to sourcing. The first is greater buy-in and engagement of key functional areas inclusive (but not limited to) operations and purchasing. Second, lean sourcing can help bridge the gap from identified savings to implemented savings following either a sourcing event or identification of another cost reduction or working capital improvement initiative by bringing together multiple parties to work on a shared and previously agreed-to outcome. Third, lean sourcing improves quality and reduces waste, potentially at multiple levels on the supply chain. And perhaps most important of all, lean sourcing creates the opportunity for ongoing additional savings.

In a short refresher series of posts on the stages of lean sourcing maturity, we'll share how these benefits can come together based on organizational sophistication.

Jason Busch

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