7 SCM Initiatives

Out-Source for cost benefit

Companies outsource non-core activities to specialized outside suppliers that can perform them better, faster, or cheaper, allowing the company to focus on its core competencies and achieve better overall value.

Supplier rationalization

Companies reduce the number of suppliers they work with to increase purchasing power, negotiate better prices, and lower the costs of managing supplier relationships.

Commodity/Category Management and Strategic sourcing

Companies organize similar purchases into categories and strategically manage suppliers across multiple supply chain tiers, grouping purchases to gain price leverage and improve overall value.

IT for Transparency driving business analytics

Companies use ERP systems, the internet, and business analytics to share information across departments and suppliers, improve integration and planning, and rapidly adapt to changes in the business environment.

Collaboration with suppliers

Companies move from adversarial supplier relationships to long-term partnerships, working together on product design, innovation, and supplier development to improve capabilities and create mutual value.

Bottom line performance

Procurement improves the company's financial performance by reducing costs, generating revenue, and securing supplier innovation that creates competitive advantages and increases profitability.

Growing importance of procurement as the integrator

Procurement connects external suppliers with internal departments through collaboration and cross-functional coordination, ensuring purchasing decisions support the goals of the entire company.