Cornerstones of an Agile Supply Chain – Imperative no. I

In the previous blog we discussed why there is a need for businesses to develop an agile supply chain and listed the 5 imperatives to build an agile supply chain. In this blog we will discuss the first imperative.

The first imperative is – UNDERSTANDING THE VALUE PROPOSITION OF YOUR STAKEHOLDERS.

For implementing any key decision, its impact and significance for the stakeholders, both internal and external should be assessed. The proposed decision should be favored by both the stakeholders. This however is easier said than done as value propositions differ from internal & external stakeholders. For instance;

• Internal stakeholders focus on price savings through preferred supplier contract compliance whereas external stakeholders prefer building relationships that create business value.
• Internal stakeholders think about leveraging portfolio of transactions with fewer suppliers while the external stakeholders want to leverage relationships across multiple forms of transactions, etc.

Let’s understand this with the help of a case study;

A global leader in thermal management with revenue exceeding $3billion with global operations had a CPO mandate – to devise sourcing strategies for the next fiscal year. The major value imperative for internal stakeholders was to increase savings while reducing cost at the same time. The CPO faced the following challenges in attaining this primary value imperative of the internal stakeholders;

• Lack of accurate visibility into historical spending patterns.
• High maverick spend even for contracted commodities.
• No avenues to identify savings and reduce costs.

These challenges can be resolved by implementing correct technology, which can help in the following way;

• Classify data and provide easy access to global/regional spend reports highlighting
  1. Items purchased.
  2. Suppliers with whom business was done.
  3. Pricing and payment terms.
• A report to specifically highlight high maverick spend.
• Automatic savings opportunities finder that lists categories with high savings potential

In the coming blog we will discuss the next imperative in building an agile supply chain.