Procurement is within Supply Chain, but is the Supply Chain within Procurement?

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Procurement helps a firm feed the supply chain. And it may even call itself “supply chain.” But does it really live the supply chain? In other words, does it embody the principles and practices of supply chain excellence within its own services “business”?

To answer this question, we must define supply chain excellence, which consists of three major elements: Customer focus to understand and shape demand; supply performance that meets customer needs and business needs; and transformation that (re)designs the value chains (and supporting resources) that produce the products and services that satisfy the customer and meet key performance requirements.

Obviously, procurement must support this. If purchasing must become supply management, as Walter Kraljic so famously wrote, then it’s not about just episodic sourcing but rather “supplying” the customer-satisfying value chain holistically. Supply management thus becomes about building the extended supply network that is positioned to fulfill customer needs. In other words, supply management is customer facing.

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