Putting the Supplier at the Heart of Procurement Thinking – Part 1

That, supplier is an integral part of an organizations procurement strategy and even instrumental to the success of the strategy is an irrefutable fact. Time may have come for procurement executives and organization’s to put it at the heart of their strategy. Undoubtedly supplier management is gaining more focus amongst procurement leaders and thinkers.

In this 4 part series we will take a look at why this is the case and discuss the key elements of supplier management, and the benefits that can be derived from effective supplier management.

In this part we will talk about – Supplier management moving towards the center of procurement thinking.

Procurement has come a long way from being mainly concerned with basic supply of materials in 1920s to being a more strategic and ‘scientific’ function of an organization from the 2000s. But nothing stands still for too long. May be we are now seeing supplier management, the start of another change in procurement focus.

So what is causing this change?

• One factor is the increased sophistication of buyers as they switch from a focus on price to a focus on total value. That requires better understanding of the supplier, and of what they can do for the buying organization to deliver that value

• More supplier focus may also be a positive sign that procurement is becoming better aligned to the business needs of internal stakeholders

•  Greater awareness of supplier and supply chain risk

• Suppliers are moving center stage, no longer seen as purely there to “keep the business running”. There has been a period where cost reduction was without a doubt the main driver for many organizations. But now, leading companies are looking at how to obtain true value from suppliers and supply markets.

In the next blog we will talk about putting supplier management in practice. So stay tuned!!