My colleague Jason Busch penned an excellent piece on commodity management last week. I wanted to dive into some of the details around that and its relation to the broader supply chain, but also the different solution approaches being used to tackle it. In the value-chain mega chart below (which basically follows a design > source > plan (supply) > deliver (inbound) process flow from left to right), I’ve outlined the various processes (brown rectangles) and some supporting solution types (blue ovals) for commodity management. PRO members, click through to see the graphic in all its glory - plus way more on how commodity management touches on many aspects of supply chain/procurement (and is supported by fragmented solution types).
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Earlier this week, Spend Matters and MetalMiner convened for our joint event, Commodity/PROcurement EDGE. We welcomed a range of manufacturers, technology providers, and consultants focused primarily on direct materials procurement and procurement technology solutions spanning a broader range of spend areas. Coming out of the event – and based on our research leading up to it – we saw several trends within manufacturing companies suggesting that most procurement organizations (except a handful of exceptions at the top) are really failing the business and ultimately, shareholders in deploying the right sets of strategies, tools, and tactics to bridge commodity management, sourcing and broader procurement activity. Click through to read the key areas where they’re coming up short.
In a Supply Chain Management Review article I penned last year, I talked about some research I had done regarding the integration (or lack thereof) of input cost planning and forecasting to the business plan (including the impact on profit). The figure below shows that 39% of procurement organizations perceive that they do a decent job at mitigating price inflation, but less than a third have an integrated cross-functional process for doing so, and only a fourth of firms use centers of excellence, specialized analytics, and third-party services to help them anticipate future input costs.