Strategy: The Missing Piece of the Supply Chain Puzzle

Supply Chain Puzzle

Reducing costs and minimizing risks might be the first things that supply chain professionals consider as their function, but that leaves out an important piece of the business equation.

Last year, CFO.com posed the question, “How Strategic Is Your Supply Chain?” in an article devoted to the topic of how CFOs can help procurement envision itself as a more strategic partner in the enterprise. Traditionally, those managing the supply chain focused on the immediate job at hand, procuring product at the best price possible while reducing risk to the company. But, as the author of the piece shows, this can be a very short-sighted approach. His example is a company that orders in bulk to get a reduced price and then is left with costly overstocks. If that product is tech in nature, those overstocks could be obsolete and difficult to unload. Paying a bit more for a more limited, but appropriate, amount of product might seem counter-intuitive to a traditional supply chain specialist; however, this more strategic move would leave the company in a much better place, both in just-in-time inventory and the ability to serve customer needs with the most up-to-date product.

According to the CFO.com article, this is where the CFO can play an extremely important role. CFOs today understand that when it comes to growth in this globally competitive economy, strategic thinking needs to occur in every part of the enterprise, certainly in the supply chain which incurs among the largest expenditures in the company. Whether it’s purchasing expensive manufacturing technology as a capital expenditure or company stationary through indirect spend, those doing the purchasing should always be considering more than price.

The CFO, more than almost any other C-suite inhabitant, understands the corporate strategy; how that strategy needs to be integrated into every function and how once-silo’d functions now need to collaborate with one another in order for corporate goals to be attained. CFOs need to convey the value of innovation; they should encourage those in the supply chain to look at all of the data that is available, both internally and externally.

Those in procurement and throughout the supply chain should be looking at different suppliers and products that they currently are not using and try to assess whether those entities can contribute to the growth of the company. Procurement should look past requisitions and come up with their own recommendations and an explanation as to how their recommendations would help the company.

This is true when it comes to consideration of new technology that can streamline processes. New software that works within the order-to-cash continuum not only answers the traditional need to reduce costs; it also provides the data and real-time visibility necessary to make more accurate forecasts, speed up payments, increase productivity, and ultimately contribute to the betterment of the enterprise.

See how the procurement and supply chain functions are being transformed.

David Nitzsche

About David Nitzsche

David Nitzsche is Vice President, Supply Management, for AmeriQuest Business Services. A supply management veteran with more than 25 years of experience, he is well versed in diverse sourcing and procurement operations.

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