Spend Matters welcomes this guest post from Rodrigo Sánchez, consultant in strategy and operations management at GEP.
Procurement strategies aim to identify the service providers that can offer the products and services an organization requires at the most competitive prices. At the same time, they also need to meet the requirements established by the different departments across the company. Logistics, however, defines the strategy that will allow companies to move raw materials into manufacturing plants and distribute its finished goods across its supply chain. And all of this aims to be cost efficient.
So how is it possible for procurement to identify additional opportunities for logistics, since it does not own the logistics strategy? Procurement has to ensure that its team is organized and performs from a category perspective. Procurement managers must understand their categories and add value to their stakeholders. This element is key across categories but especially in logistics, due to the impact this category has on the organization’s value chain.
This is not enough, however, to achieve additional savings and create value for stakeholders. A category manager in logistics must understand the company’s supply chain as an equal within the logistics team. She should become an expert in her respective category and understand and foresee how emerging technologies and trends will shape the industry. If she cannot reach this level of expertise, the category manager will face an uphill battle.
Disruptive technologies are an example of one factor that may challenge the status quo within supply chain, leading to a change in mindset and, eventually, to a change in processes. For example, there are several new platforms and apps being developed to connect brokers or carriers to organizations to achieve competitive freight rates, through the creation of synergies in volumes and reduction of empty returns. Further, there are new technologies that seek to automatize processes and activities such as truck driving or printing 3-D pieces.
Identifying these opportunities and industry-defining changes will help logistics category managers find additional financial benefits and help get a “seat at the table” within the logistic departments to serve as a subject matter expert.