Network Capable Buyers Needed:

“Is there a cause-and-effect relationship between the level of supply management networking and the performance of the supply chain—and ultimately the business”?

1. Key notable points from the report:

Supply management’s ability to prove its strategic relevance and impact on corporate performance depends on its degree of integration. However, other functions will give up authority and involve supply management only when the positive performance implications resulting from such integration can be verified.

The stronger the degree of supply management’s integration, the better a company’s business and supply management performance, showing the statistically significant relationships between supply management integration, human resource management, and supply management and business performance.

Low performers:

Did not fully recognize their precarious situation.
They consider themselves better than they actually are
Do not feel motivated, understand the seriousness, or do not see the road ahead of them.
Lack the sense of urgency that is so important for the change

High performers:

Underestimate their success
Are driven to achieve even higher levels of integration.
Strive for more opportunities for improvement than actually exist.
Do more than is actually necessary.

Not industry specific

The issue does not discriminate by industry and the same problems can be found across all market sectors.

Key role of senior management

The visible support of senior management is a critical factor for success.

Broad measures of Success

a supply management organization is not necessarily successful if it reduces costs and does nothing else.It succeeds only when it contributes to the firm’s performance and strategic position.

Link to company performance of “considerable magnitude”

return on assets,
return on equity
reduction of cost of goods sold
sales growth,
EBITDA growth.

“Supply management performance accounts for 17.8 percent of the variance in corporate performance”

2. The Talent Factor

CPO’s must, therefore, recruit individuals who are:

Expert in procurement matters,
Knowledgeable about planning, strategy development, engineering, marketing, etc.
Competent networkers

CPO’s who are closely committed to talent management are rewarded with better integration and with employees who do their procurement jobs more effectively.

3. Conclusion

The research has demonstrated that if supply management is integrated with the rest of the organization, it can significantly improve its own performance and that of the business as a whole.

Supply managers must make plans to attract and retain talent by creating attractive career opportunities, with clearly defined roles and support staff with training to develop network-capable contributors.

Networking is the new goldmine in supply management… for those who know how to dig it, the report concludes:

“Welcome to the age of the ‘network capable buyer”.

Nuff said…

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