When we look overall at Supply Chain strategy and governance, one of the areas that stands out as a particular challenge is Supply Management, otherwise known more traditionally as “Sourcing and Procurement.” Our 2014 CSCO study highlighted a significant tension: that is, while heads of Supply Chains tell us that an overall top priority initiative is the “quality of product supply,” at the same time we know that organizationally, the Supply Management function is a direct report to the overall Supply Chain organization for only 55% of respondents. This ranking places Supply Management seventh in the list of direct report functions. This of course changes industry-by-industry (those of you who follow my work know how much I love this part!)… – for example, in Consumer Products, Sourcing and Procurement is ranked eighth as a direct report function, while for Industrial Products the role is second in the list of directly reporting functions.
Supply Chain professionals have of course looked to address these legacy organizational constraints, as the same study also tells us that over the last year, one of the top Supply Chain improvement initiatives has been “supplier collaboration.”
But it won’t get any easier. Leaders will continue to try to bring more spend under management and governance, so it can be leveraged to drive additional savings. Everyone knows what has happened to the price of crude oil over the last year, which is having ramifications across the supply network, no matter what industry we look at. At the same time, companies are talking about Sustainability again, with a passion rivaling what we saw from 2006 – 2008. The conversations have moved beyond operations and emissions tracking, and current initiatives around sustainable sourcing fall squarely in the realm of Supply Management. And finally, the ongoing CEO push for growth from new products and new markets will require that Supply Management professionals, wherever they sit, are able to see the linkages between their Supply Chain and overall corporate strategies.
The April edition of our Gartner Supply Chain Newsletter presented a cross section of some of our research – some recent and some more evergreen – in the area of Supply Management. We looked at the topic from many angles – first we touched on some “essential” functional guidance, then we looked more deeply at the commodities story, and then finally we considered things like organization and talent, specific techniques for supplier visibility and collaboration, and what the transition to Digital Business means for this particular function in the overall value chain.
These reports are available to clients, but we have other outlets for anyone who has interest in exploring now. My colleagues Richard Adams, Ray Barger and Deborah Wilson will be presenting on some great Supply Management topics at our Phoenix conference next week. Additionally, we have made available an on-demand webinar recently presented by Ray and Rick on Digital Business for Supply Management Leaders. (Please note: Non-Gartner clients will be asked to register)
Gartner Supply Chain Executive Conference
12-14 May 2015
Digital Business: Implications for Supply Management Leaders
Hope to see you in Phoenix!
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