Supply Management Best Practices: “Get Tough” Attitude
Controllers at both large and small companies place supply management nearly at the top of the list of areas on which they need to focus. This reflects their response to the economy and the upturn in business conditions. Specifically, it means taking a tougher stand on price increases and renegotiating existing supplier contracts when possible. It also means continuing to consolidate the supplier base, issuing blanket purchase orders for some goods, and shifting inventory to suppliers. At the same time, most controllers increasingly recognize their dependence on their sup-pliers’ control of their own costs; hence, they are looking across the entire supply chain and their logistics operations for savings.
Another best practice that purchasing manager now increasingly favor is global sourcing. Foreign-based suppliers are able to cut most companies’ materials costs by 30% or more, although the supply chain is longer and better planning is necessary. E-sourcing and e-purchasing processes are also gaining favor with purchasing managers, with about one in five now doing either or both.
