A company’s profit margin reflects management’s ability to control top line costs. Purchasing typically spends ‘half of every dollar’ the firm receives. Therefore, procurement must ensure that the firm has an adequate ‘uninterrupted supply’ of needed raw materials, yet add value to the bottom line.
As in most industries, data capture is a necessary step. However, it is more important to be able to analyze and use that data properly. Equally important, is the development of strategic sourcing and supply chain management strategy in support of the company’s business objectives.
For example, it is possible to achieve much-needed cost reduction opportunities, yet maintain or improve upon delivery even though the company may be using emerging markets. One of the opportunities, which has existed for 20 years is the labor arbitrage that exists in and between the different economies around the world.
ISM published a CAPS Research study titled, “Sourcing in Emerging Markets” in November of 2015. In its research, CAPS noted that “sourcing in emerging markets (also known as low-cost countries) is an activity that is no longer considered an exception, nor is it solely used to source only low strategic spend categories.”
Transforming Procurement Operations. Today, procurement is expected to bring value to the entire business enterprise. Some organizations have difficulty migrating their legacy processes to more advanced procurement models. For more on this topic, please follow this link.
Process Management. It is important to have ‘effective business processes’ in place. Otherwise it is very difficult to reach high performance levels. For more on this topic, please follow this link.
Organizational Structure and Performance. Top performing organizations require structure, culture and resources to produce high performance. Departments designed around four areas achieve high performance levels. For more on this topic, please follow this link.
Manufacturing and Supply Chain Services
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