- 17 May 2016
- Written by: yves
- Categories: Procurement, Supply Chain
Procurement and Supply Chain management in businesses has always been important. But in recent days, its relative importance has been on the rise, especially as senior executives focus more on growth. As today’s global economy realities and trends push the management of supply chain to the forefront of business strategies, managers are realizing that supply chain and procurement capabilities and characteristics define how a business operates. As this continues to take hold, it is becoming for managers to embrace and act on elevated and evolved roles in value creation, leadership and strategy formation.
Today’s unpredictable markets are forcing companies to change and to align their costs with revenue. The streamlining of resources, combined with a never-ending drive to ensure greater value is realized is producing impactful and extraordinary results. Considering this, it becomes easy to see why procurement and supply chain management is becoming increasingly important to organizations.
However, while profitability is returning, growth still remains elusive. With this realization, business managers are now striving to attain next generation productivity gains by anteing up their willingness to be innovative in areas like where work gets done and how it is done. To achieve this efficiency, more companies are shifting from a purely-functional focus and now taking on a more global view by standardizing their operating processes or leveraging their end-to-end processes.
As a manager or executive, it is important that you recognize that the performance of your business is considerably directed or determined by the state of your supply chain. Today, the supply chain has become a core determining factor that defines a company’s business model. As such, the operating model of most of today’s organizations is defined by how well these organizations’ supply chains function.
Reasons Why Procurement and Supply Chain Functions Are Important
More than ever before, the success of any business today is more dependent on the performance of its supply chain. For you to see why it is fast becoming important to embrace a more supply chain focused business model, here are a couple of reasons for you to consider.
The failure of a supply chain, or the lack thereof, could visibly impact a business’ market valuation
When a business’ supply chain fails or is non-existent, this could considerably impact the business’ market valuation negatively. Any company’s failure to connect its objectives and outcomes to its realistic supply chain capability could be catastrophic, and the resulting market movements could lead to its value depreciating.
For the corporate suite, predictability is priceless
Reliability is a key determinant of a company’s or corporation’s valuation. However, reliability is more than just getting a product delivered to a specific point by a specific time or having a service or services performed whenever needed and as needed. Reliability also means being predictable. Considering that the customers expect the right quality and the right quantity delivered at the right time every time, it is important that the business stays predictable. As such, it is important that it delivers on all its promises – both externally and internally. Virtually all of a company’s internal functions – manufacturing, sales, procurement, finance, etc. – will perform more efficiently and capably when all variances are minimized. The absence of predictability will ultimately lead to costs multiplying as unpredictability and uncertainty are the major contributors to rising costs within a supply chain.
Global growth requires a globalized and reliable supply chain
Most of today’s supply chains are more globally-focused, technologically-infused, interactive and collaborative. For any business to grow out of its cocoon and address a more global audience, it will have to improve its procurement and supply chain to ensure that its services and products reach more people. As such, it is crucial to focus on a creating a supply chain that is intelligent, well-defined and well-informed. As such, you should be able to make all the right decisions concerning the most influential business aspects and developing a chain that exudes interconnectivity, flexibility, end-to-end transparency, customer-centricity and any other additional attribute that is appropriate for your customer base, business strategy or specific industry.