Procurements Place in the Value Chain

Dave HenshallStrategy2 Comments

Procurements Place in the Value Chain

Procurements Place in the Value Chain – An interesting commentary from Spend Matters on procurement’s position in the supply chain which supports my own views (maybe that’s why I found it interesting). Namely, that procurement is the upstream part of the supply chain, where initial value is captured, whilst warehousing and distribution are downstream activities, that support delivery of initial value. Common sense really.

 

We buy, add value, and we sell. We must excel in all.

Procurements place in the value chain

 

So, unless value is captured upstream it can not be delivered downstream – this is why procurement is in pole position in the supply chain.

Unfortunately, many procurement organizations do not assert this pole position in their organization and so fail to influence the value chain.

Paper Money PeopleThese organizations focus on increasing supply chain efficiency – but fail to see the big prize. That is a strategically integrated supply chain from suppliers through to the end customer. Porters view of procurement as a support function in the value chain should be discarded, and the following maxim embraced:

“We buy, we add value, and we sell” and we must excel in each activity to be successful.

Nuff said …

Do you agree or disagree?