Updating existing networks in bottleneck companies
In this article, the author offers pragmatic advice on how top management can recognize the extent of its own supply weakness and treat it with a comprehensive strategy to manage supply.
He leads the reader step by step from the roots of the problem to the implementation of a solution.
This calls for nothing less than a total change of perspective: from purchasing (an operating function) to supply management (a strategic one).
Whenever a manufacturer must procure a volume of critical items competitively under complex conditions, supply management is relevant.
But many purchasing managers’ skills and outlooks were formed 20 years ago in an […] " In many companies, purchasing, perhaps more than any other business function, is wedded to routine.
But many purchasing managers’ skills and outlooks were formed 20 years ago in an era of relative stability, and they haven’t changed.
Is the company making good use of opportunities for concerted action among different divisions and/or subsidiaries?
5 To what extent might cooperation with suppliers or even competitors strengthen long-term supply relationships or capitalize on shared resources?
Now, however, no company can allow purchasing to lag behind other departments in acknowledging and adjusting to worldwide environmental and economic changes.
Such an attitude is not only obsolete but also costly.
When an automotive parts maker analyzed its sintered metal components supply market, from which it had been sourcing for years, it discovered that political instability was jeopardizing its supply. Vendor mix, extent of contractual coverage, regional spread of supply sources, and availability of scarce materials all contribute to the company’s supply risk profile.
The company’s top management promptly ordered a change in purchasing policy to build up alternative domestic sources. A company can often take action to lessen unacceptable risk.