Supply Chain Management Best Practices, 3rd Edition

CHAPTER 5Procurement: Go Right to the Source

Flashpoints

• The purchasing department should be managed as a strategic supply chain center rather than as merely a place to beat down costs.
• An effective way to stay on the same page as your suppliers is to share transactional information with them.
• Simplifying your product line can lead to a more efficient supply chain flow.
• Change management is a key enabler of effective cost containment efforts.
• Collaboration ensures that procurement savings don't vanish before a company is aware of them.

While not necessarily used interchangeably, the terms procurement, purchasing, and sourcing all describe one of the main supply chain management processes. As Larry Paquette, author of The Sourcing Solution, describes it, the role of sourcing is “to locate the one company out there that can provide needed product better than anyone else.”¹ In Essentials of Supply Chain Management, author Michael Hugos gets right to the point when he notes that, by tradition, the main activities of a purchasing manager are “to beat up potential suppliers on price and then buy products from the lowest cost supplier that [can] be found.”² Any mystery about the role of the purchasing manager is dispelled immediately in the title of Patricia E. Moody's book The Big Squeeze.³ At any rate, the notion that purchasing does the dirty work for accounting has been popularized early and often throughout supply chain circles.

Concurrently, there's also a long-standing ...