Supply Management: The shifting agenda

It strikes me that the combination of shifts in market and economic conditions, aggravated by buyer behavior, has fundamentally changed the supply environment. Big issues that I hear now are around things like:

– reduced competition due to supplier consolidation and the ‘coopetition’ between remaining suppliers

– the need to develop strong relationships with key suppliers, to generate loyalty and secure supply

– the importance of innovation and continuous improvement through supply chain integration

– limits on savings through negotiated price (input) and increased focus on cost reduction through lifecycle improvements (output)

– the importance of internal collaboration, especially with Finance and Legal, to ensure the information, empowerment and tools needed to achieve these goals

– a reduction in the focus on traditional purchasing because it is increasingly automated, driven by catalogs, overseen by compliance software or outsourced

– a need to re-think the ‘global / local’ mix of authorities, relationships, contract models

The agenda today is far more about achieving optimised outcomes from trading relationships – so a much wider remit that demands new skills, procedures and thinking by the supply management organization (and an environment that plays to the strengths of IACCM).

Making that change is hard, especially when the mantra that has come in recent years from professional associations and consultants has been to promote adversarial negotiation, establish control, enforce compliance, drive price reduction, trust no one. Yet it is exactly those behaviors that have forced suppliers to consolidate and driven competition out of many markets.