Closing the Direct Procurement Gap

Today, as organizations have worked to innovate and build worldwide business, the supply chain has morphed and become multichannel and global to support agility and resiliency. Unfortunately, these changes have created a gap between today's procurement practices and the demands of the new world supply chain.

“It has taken time for prevailing procurement practices to catch up with the new reality of the supply chain,” Mondher Ben Hamida, vice president at the collaborative planning solution vendor E2open, told us. “This lag causes frictions and issues in the supply chain. Best performance companies are recognizing this gap between procurement strategies and processes and the supply chain and are closing it quickly.”

E2open recently sponsored a study on the topic, which found that “higher capability firms,” in which the direct procurement organization exerted influence and leadership, achieved 25% higher “supply performance” than the general study population in terms of supplier quality, supply risk management, delivery, flexibility, cost competiveness, and other metrics.

Clearly, the procurement organization is critical in making the supply chain as efficient as possible, despite shrinking product life cycles and an increasingly fragmented supplier base. Today's multitiered supply chain is shifting the areas of concern. Today, supply chain and purchasing professionals cite risk and visibility as their top concerns, the study found, with supply planning and order management and visibility as important but secondary concerns.

If these are the questions, then better integration with suppliers is the answer. “Risk is important and requires collaboration, coordination, and the sharing of information with suppliers,” Hamida said. “Its highly complex to maintain a global network with consumption points all over the world, so you need to have a single repository that consolidates all the flows of information.”

With good information, organizations can make better decisions about important business decisions, including cost management and production locations. However, it's going to take concerted effort to close the information gap.

Let's get talking about how the purchasing organization needs to evolve to address the evolving supply chain. See the infographic below for additional data points. Feel free to weigh in on the comments section below. Or drop by our live chat on direct procuement Friday, Jan. 31, at 2:00 p.m. ET/11:00 a.m. PT. Our guests will be Rob Schoenthaler, chief customer officer at E2open, and Pierre Mitchell, chief research officer at Spend Matters, who will answer your questions. We hope to see you there.

1 comment on “Closing the Direct Procurement Gap

  1. Hailey Lynne McKeefry
    January 31, 2014

    We had a great time on this chat…and even if you didn't make it, you can still read and learn: Live Chat 1/31: The Future of Direct Procurement


    also feel free to post questions here or on the chat and we'll work to get them answered!

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