Inadequate sourcing Competencies are costing midsize companies over 134 billion in missed supply savings opportunities annually states the independent research firm Aberdeen Group. Hidden behind advertising spin, fear enticing sales pitches and entertainments to buyers is that sourcing raw materials and services now is a non core competency that instills just your invest puts you at a serious disadvantage in prices to your organizational bottom line. Examples of poor/risk adverse Buying methods: Decentralized buyers sounds great for empowerment but no volume leverage and very prone to private gain versus employer need decision making. Bids/online auctions results can only be best of a mediocre bunch as restricted participation of suppliers to your restricted spend leverage. Renegotiations provide a false sense of holding the line on increases in the name of justifying business with the devil you know and handling supplier
Even with all the aggressive Pressures to control costs, the previous practices on either side of the desk are still in play. Procurement, not being an essential part of the business strategy, is a manifestation of this lack of respect senior management consists of procurement process and the people handling them. Though few prepared to admit, the truth is that raw materials, office supplies and transport services are commodities. Until recent technology advancements and new business models, procurement decision making has been frequently influenced by advertisements, relationships and entertainments . . . not the lowest cost, much less best value.
Procurement is not a heart Competency for nearly all companies. . .even individuals who perform much better than most still leave important dollars on the table because of lack of technology/integration, buying not having a strategic position, fuzzy risk dimension, questionable conduct/processes and most importantly a lack of spend leverage. These problems prevent attracting the right talent, have very little likelihood of gaining internal interdepartmental esteem and inferior information/inventory visibility becomes anticipated.
Only the largest companies look to have procurement being an integral part of their strategic aims. They have the resources to purchase expensive software, employ seasoned procurement talent, have the senior clout to centralize purchasing to maximize leverage yet these firms leave dollars on the table because of utilizing bids, renegotiations and have difficulty keeping up with inner requirements versus leveraging marketplace choices. Efforts at transformation has Been allusive as changing organizational structures, standardizing processes, aligning information systems, preserving ability, managing risk, compliance and provider development, have proven to be overly daunting. The trend in procurement in Recent years for manufacturers/distributors has clearly been to acknowledge purchasing is not a core competency and to optimize their spend leverage they have to align themselves with a business process outsource supplier BPO. Whether purchasing plant supplies, raw materials or transportation services, a company cannot effectively or afford to handle procurement by themselves.