Procurement Skills Increasingly Critical to Supply Chain

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Rich Krajewski
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Supply Network Guru
I wonder
Rich Krajewski   7/9/2014 5:39:44 PM

"Another report from research firm IDC, entitled Is Procurement Now the Key Supply Chain Skill?"

I wonder why IDC posted that as a question rather than as a statement. I guess they weren't sure and hoped someone among their readership could tell them.

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Re: true
SP   7/8/2014 3:29:28 AM

Yes procurement managers keep getting unexpected situations many times. And its so hard for them to be innovative apart from lookng into their regular schedule. Sometimes I feel the procurement department also few people dedicated to strategic thinking and planning. And there must be competely different team for regular procurement firefighting. But in reality organizations dont give this must importanct to purchase department.

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FLYINGSCOT   7/7/2014 9:27:45 AM

I agree that more companies are becoming procurement rather than manufacturing companies.  In many industries the barrier to entry is too great to be a world class manufacturer (capital costs etc) so the trick now is to be able to choose the best manufactureres at the right price, capacity and responsiveness.  That is easier said than done.

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Re: It is team effort
t.alex   7/5/2014 7:42:21 PM

Procurement person involves not just at the last stage. He/She should keep close watch on the vendors and the components so as to avoid any disruptive factors to the business.

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It is team effort
_hm   7/5/2014 11:10:52 AM

Most work listed is shared work. Most part is done by designer, complinace engineers and others. Yes, procurement guy does get involve may be at last stage of product.

I will say this is team effort.

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Stock Keeper
Skill mix constantly evolvoing
journeyman1865   7/5/2014 9:54:01 AM

Often items have been outsourced with out consideration of the support system required. Same occurs when items are brought back in house.

One example was a company that had an EMS buid its product offshore. They no longer considered it necessary to update the BOM's as changes were made. Items became dock to stock. Without systems in place to support this process there were delivery and quality spills, and eventually loss of design control and the creation of an offshore competitor. Even with sytems some of this would have occured, options were truncated as design control was ignored.

In some industries manufacturing knowledge must be retained if the product is competely outsourced. Where it resides in the organization can vary. Auromotive requires the procuring company be responisble for the supplier and is expected to follow the APQP process. The goal is to avoid the nightly news if all other considerations are ignored.

Bringing manufacturing back in house puts a different strain on the system. Rather than being responsible for higher level functions but placing fewer orders and releases, detail knowledge is required of componet materials and supply chains. The procurement group may have to compete with a multibillion dollar purchasing group when only millions of an item are now required. One late part is an undelivered/sold item.  The order of magnatude or more in purchasing volume is a cost that is an obstacle. This is reflected in the overhead required per order placed and the volume discount from a supplier. There are other compelling reasons to do this, as anyone who has received 6 containers of unsaleble product can understand.

Both illustrate that leadership requires limber thinking, planning and execution. Each company has a different requirement and method on how to control the above sitiuations. Some chose to put the responsiility completely on Supply Chain functions. Others fragment it. The diasater waiting to happen, considers that support functions as not required.

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Negotiation skills
Jacob   7/4/2014 3:07:14 AM
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"As more high-tech manufacturing shifts to western locations, and as companies take advantage of the shrinking cost gap in manufacturing between China and the US, procurement managers may be presented with new opportunities to source components and negotiate contracts."

Nicole, I think most of the companies (atleast my company) are doing procurement through open tenders and there is less chances for negotiation.  When they are going for rate contract they can negotiate for better pricing.

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