Where Does the Services Supply Chain Lag the Physical Supply Chain?

It is not overly surprising that the services supply chain lags the physical supply chain (i.e., direct materials) in rigorous management processes. But the delta between relative maturity and sophistication of indirect materials (e.g., MRO, IT) procurement management compared with services spending is perhaps even more suggestive of the comparative immaturity of how organizations are managing the lifecycle of services suppliers and services engagements overall compared with other spend types.

Spend Matters research suggests that:

  • Organizations are better at anticipating and forecasting services requirements and demand in 
comparison to focusing on continuous improvement programs and building deeper visibility into 
multi-tier services supply chains
  • The relative sophistication of supplier diversity programs in services supply chains is stronger compared to other areas in our analysis, but still surprisingly less than that of indirect and direct supply chain areas given the high value often placed on diversity spending in contingent labor (and the ability to count multiple tiers of suppliers in a “sub” situation)
  • Supplier performance management remains a particular area of improvement for direct, indirect and services spend, but our survey results suggest the average score (for the area) in the middle of “barely” and “somewhat” in response to the question of performing the function, indicates an greater opportunity for engaging suppliers to leverage vendor innovation, general creativity and commitment to social responsibility, among other areas

This analysis is based on the Spend Matters research study, Applying Supply Chain Rigor to Contingent Workforce Management, which is available for limited period of time for free download, via the previous link, in the Spend Matters research library.

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