Spend Matters welcomes a guest post from Art van Bodegraven.
A quick note of introduction: I am an end-to-end supply chain guy, with experience dating to whatever we were before becoming logisticians. As a practitioner, consultant, educator, blogger, and author, I spend my days cavorting with colobus monkeys among the branches and vines at the treetop level. We are complementary, in that they have no thumbs while I am somewhat renowned for being all thumbs. Jason and Pierre have kindly invited me to join the dialogue from time to time, and, always spoiling for a fight, or at least a decent argument, I agreed. Fair warning: most of what I write is not rooted in research, but is spawned by experiential exposure over time. In other words, it’s opinion without data. Here goes.
We in the supply chain and procurement fields spend an inordinate amount of time contemplating what it means to be a redheaded stepchild. For those of us who were raised up to believe that procurement was for serious supply chain professionals the dark side, sourcing was surely that distant relative of questionable provenance and worthy of a sound beating. I had to modify that primitive perspective upon discovering that fully 50 percent of the children in our immediate family were professionally committed to global sourcing and procurement in corporations of some repute.
The road from yesterday to today
So, how did I, and we, reach this sad state? My contention is that many of the disconnects in the supply chain that we lament are products of the prevailing operational model of the last century plus received business wisdom. In them days (to channel the late, great Mongoose, Archie Moore), powerful panjandrums known as Chief Operating Officers (COOs) actually ran the internal workings of great corporations.
Free research! Changing Roles of Procurement Leaders -- The Analytical CPO
The COO's job, some would maintain, consisted of creating just the right amount of conflict, competition, and tension among the several operational functions reporting to him (and, in the day, it was always a him). He dispensed access to capital according to whomever his direct reports was in favor of at the moment (and could tell a compelling story), invented performance metrics designed to motivate mid-level managers to out-do their peers (irrespective of the inherent conflicts among individual objectives), punished those who deserved additional testing with budgets divorced from reality, and took credit for everything good that ensued, while throwing those who disappointed in front of moving trains.
Over time, functional areas banded tightly together and pursued their own narrow interests. The traffic managers soon tired of slugging it out with the warehousing gang (who may not have been very bright, but were of strong back and hard head, invaluable when the fights broke out). They defined their universe as being physical distribution, then logistics after a few of them had attended university. Customer service sought solace in the comforting arms of sales and marketing. Manufacturing devised independent solutions to plan and execute, according to their peephole on the world. And procurement went its own way.
Enter supply chain management
Those worthies, descended from generations of operatives who collected swag from suppliers like an uninhibited coed at Mardi Gras goes after beads, actually went pretty far in developing their own rules and definitions. Subsequently, with their impressive spend impact becoming visible to the disproportionately powerful CFO, they created a vision for themselves and a new enterprise positioning in becoming sophisticated power players: Supply Management. By and by, as Br'er Rabbit might say, they even imagined that they were the both the driver and engine that steered and powered supply chain management. Perhaps their professional organization inadvertently helped foster this thought.
In these latter days, we have discovered that one, sourcing and procurement are definitely part of supply chain management; two, they are both important and powerful; and three, they neither steer nor drive the profession. That last comes as a disappointment to some and generates considerable heat.
Getting real, a bare handful of companies figured this out two decades or more ago, and reconstructed their operations to create holistic, integrated, and synchronized end-to-end supply chain organizations that also - get this! - included working hand in hand with key suppliers and critical customers. In this 21st century, too many have not even got the 20th-century version of complete supply chain right, and procurement is still fighting with field operations, is still fighting with material management, is still fighting with transportation, and is still fighting with the CFO. And so on. Watch out if legal joins the fray; legal always wins.
Download this free research paper: Centralise or Devolve Procurement – Why Not Both?
Others have finally seen the light, and have some vision of what the shining city on the hill might ought to be. But even the more enlightened struggle with how to actualize the vision, and how to make it both work and pay off.
I am encouraged. There's good reason for the Supply Chain Council to define SCOR modules as Plan-Source-Make-Deliver-Return. We'll dig a little deeper as time goes on into how sourcing and procurement can be respected value-adding partners within the supply chain - not drivers, not dominators, but important collaborators. Meanwhile, be kind to one another. We are all on the same team.