7 Essential Attributes of Strategic Supplier Partnerships!

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Blog post originally published by Michael Massetti, Executive Partner at Gartner,  at https://www.linkedin.com/pulse/6-essential-attributes-strategic-supplier-michael-a-massetti/  and permission to publish here provided by  Michael Massetti.

 

Though the phrase partnership is often used, what really constitutes a strategic supplier partnership?

In a previous article about supplier management, I suggested that the more a supplier tells you that they are strategic, the less they really are. Strategic is a term that is often overused. Whether the phrase refers to sourcing, procurement, relationships, or other matters, its use is prevalent.

The notion of partnerships is equally ubiquitous and similarly both mis- and over-used. This article will identify a taxonomy for a strategic partnership between two parties.

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Commodity Management – What is your Buying Strategy?

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In any company or industry that sells products the cost of the raw materials and components is often the single largest expense.  Despite the magnitude of this cost however there is a wide range of focus put on managing this expenditure from proactive and strategic to reactive and tactical.  In some cases there is a great level of  planning applied before a single purchase order is placed.  In other cases buying decisions are made subjectively and with very little focus.  Further the experience in those buying these goods can vary significantly as well.

Supply Chain is about much more than just negotiating lower materials costs.  A well constructed Procurement Strategy will raise the value of the Supply Chain to your company.

How do you manage your materials spend?  Are you executing a Buying Strategy or are you just blindly placing purchase orders ?

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Supplier Relationships – Don’t go over to the Dark Side!

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Early in my career I worked in a department that was responsible for the design,testing, sourcing and procurement of packaging materials.  It was a great experience and introduction to so many aspects of the Supply Chain.

But one day one of my peers was fired.  He was responsible for negotiating with the packaging suppliers.  As it turns out he was taking kickbacks.  When that was discovered and verified he was summarily dismissed.

I never got the precise details but I don’t believe he could have got more than a few thousand dollars for his illicit efforts.  More importantly he got a black mark on his resume, and in his life, that he could never erase.

That was my first lesson on the do’s and don’t of Supplier Relationships.

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What’s the Difference between Procurement and Purchasing? (Infographic)

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Blog post provided by http://argentus.com.  Argentus is a boutique recruitment firm focused on Supply Chain and Procurement.

 

It’s a good question. We often see these terms used interchangeably, but there are some concrete differences between Procurement and Purchasing such that we think they are two different practices, each with their own set of concerns and skills.

We thought we’d take it upon ourselves to do a summary-style Infographic that highlights some of the core differences between what’s considered “Purchasing” and what’s considered “Procurement.” In short: Purchasing is an activity that’s a subset of the overall Procurement process. But there’s more to it than that.

We should give a caveat: in some professionals’ opinion, arguing about the difference between “Purchasing” and “Procurement” is a matter of semantics. The terms are often interchangeable. But at the very least, the discussion helps give some perspective on two different approaches to how organizations buy the goods and services they need to run. Some organizations are – sadly – still concerned only with “Purchasing” instead of the more nimble and strategic approach of “Procurement.”

Check out the Infographic below!

 

We hope you enjoyed the Infographic.  There are many different opinions about the definitions of Procurement and Purchasing.  There can be differences of opinion between Industries, across Geographies, and from various levels and parts of your organization.  Most importantly individuals may have different views of Procurement and Purchasing even if they work beside each other.

Please share your thoughts on this comparison!

Blog post provided by http://argentus.com.  Argentus is a boutique recruitment firm focused on Supply Chain and Procurement.

 

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Procurement Outsourcing – Keep your Integrity!

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Like so many professionals Procurement people are very proud.  They are proud of the job that they do and the contributions that they make.  And they are most always proud of their ability to negotiate and get the best deal!

But at some point in their careers, especially in the age of Outsourcing, they are likely to have to deal with potential suppliers who provide Procurement services.  Procurement typically negotiates deals for other functions like I/T, HR, Manufacturing and every other area in the company.

Now they are faced with dealing with companies who basically state that they can do a better job at negotiating and Procurement than they do.

In the face of such a perceived, direct challenge to your abilities how do you and your Procurement team deal with this professionally and with integrity?

Continue reading “Procurement Outsourcing – Keep your Integrity!”