Procurement certainly has come a long way.

The simple definition of “procure” that everyone knows is “to obtain, buy or acquire.” A more complicated definition would be something such as “obtaining goods and services from requisition to receipt and approval of invoice payment.”

Today, procurement (as “BUY”) plays a crucial role in all aspects of the supply chain mega processes of PLAN – BUY – MAKE – MOVE – STORE – SELL/DELIVER.

The new Tompkins Supply Chain Consortium report, Leading Procurement Practices: Trends of the New Procurement Organization, notes that procurement is shifting from tactical to more strategic activities.

In the past, procurement was very much a transaction-oriented process, whereas today it is a strategic initiative process. The shift from tactical to strategic can be attributed to procurement activities such as market knowledge, supply base management, risk management, and supplier selection, However, the core functions of strategic sourcing, purchasing, procurement IT and supplier relationship management are also still highly important.

Procurement is beginning to add value to the company through strategic alliances and advanced competitive analysis. And as the function gains ground, supply chains are demanding more skilled procurement professionals.

Some of the best and brightest are currently seeking careers in the procurement field, and they need to understand how to be effective in today’s complex supply chain environment.

Organizations are looking for broader experience in procurement due to increased globalization. This includes advanced relationship building and multilingual skills. Even professional societies are providing certification to enhance the skills of the professional workforce.

The Consortium report also indicated that the number of colleges with supply chain and procurement degrees is on the rise. So, I think it is safe to say that involvement in procurement is higher and will continue to advance further into supply chains.

What is your company’s current take on procurement? Is the evolving nature of procurement affecting how you hire staff?

Resources

Hot Topic Report: Leading Procurement Practices: Trends of the New Procurement Organization

Article: Procurement Process Improvements Can Lead to Increased Shareholder Value

Case Study: Procurement Assessment  

The Buy Process: Asia Supply Chain Excellence

At this very moment in your supply chain, what is the current demand for any given product?

It seems like you would need a magic wand to answer this question. I mean, how is it possible to know what customers in your market are buying right this moment, so that the information is signaled back through the entire supply chain?

This is the kind of information that would allow suppliers to provide even better orders and deliveries that respond to real-time information versus fallible demand forecasting. With this kind of information, you could avoid pitfalls like late shipments, overstocking, and unnecessary transportation costs.

It is possible through Supply Chain Transformation –  and it’s not a magic wand. By using sales and operations planning, aligned organizational structures, and the right technology, it’s possible.

For example, let’s say you are in the dog food business. Right now, a customer in the grocery store is walking down the pet food aisle with a coupon that she intends to use to buy four bags of puppy chow. After she makes the purchase, a signal goes down your entire supply chain that drives back to the distribution center (DC).

As more customers come into the store with the same coupon, real-time data is sent back to the DC. In an operational process that is as close to custom as you can get, this data “tells” the dog food supplier to re-stock that particular store’s puppy chow inventory to make up for the increased demand.

True, the DC may have to deliver more often to the store, but it’s not deliveries based on forecasting of what might happen in the market. It’s deliveries based on what is happening with customers on the demand side.

Supply Chain Transformation means supply management and demand planning that leads to excellent customer service and reduced costs for suppliers. As a nice bonus, supply chain transformation also makes forecasting errors a thing of the past.

What moves is your company making to transform supply chains?

More Resources

See a case study on supply chain transformation here: http://www.tompkinsinc.com/about_us/case_studies/supply-chain-transformation.asp

I’ve spoken with more than a few company leaders lately who have told me that their network designs no longer rely so much on certainty. And even if they have conducted a network optimization within the past three years, they feel that it may already be outdated.

The Tompkins Supply Chain Consortium recently published a report on Supply Chain Network Design Practices, and it could not be timelier.

The report notes significant changes in network design practices as compared to previous years. But this does not surprise me. Businesses are changing many of their practices in order to adapt to the current economic environment.

Another key finding – companies have been decreasing the amount of time between network studies from two years to 18 months. And to their credit, the smartest organizations have made network planning a continuous process in order to keep up with shifting demands, customer requirements, transportation costs and real estate costs.

This is another reminder of the rise in complexity of today’s supply chain networks and fast-changing business environment.

And while the process is typically complex, it needs to be complex as the supply chains we are modeling are complex.

A good network design can reduce costs, improve customer service and minimize capital. Updated regularly, efficient supply chain network designs flow smoothly, distribute information, meet customer demand and contribute to profitable growth.

When did you last optimize your network? What timeframes are you dealing with today? Read the Supply Chain Network Design Practices report and let me know what you are doing to keep up with the growing complexity of global supply chains. 

Jim

Resources:

Hot Topic Report: Network Design Practices - How Sophisticated is Your Supply Chain Network?

Network Optimization in the Supply Chain: Strategies for Reducing Costs

Warehousing and Distribution: Finding Profitable Growth in the Supply Chain

The Five Biggest Mistakes (and How to Avoid Them) When Optimizing the Supply Chain Network

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Photo credit: Horia Varlan

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“Adaptability” seems to be a simple enough term, but it is not something that businesses should take lightly as we begin to close out 2011 and prepare for the coming year.

I recently wrote a paper called The Adaptive Supply Chain: Today’s Mandate for Profitable Growth. Many of you may recognize the topic if I have spoken with you lately.

With today’s constantly changing business climate, we can no longer rely on the past to be a good indicator of the future. Risk, instability, and rapid change are the new norm. To be successful, we must be able to adapt. It is even more important today that organizations reach out to change and refuse the traditional status quo to gain profitable outcomes in their favor.

And remember - it is impossible for a company to be truly adaptive unless it utilizes responsive supply chains. Responsive, adaptive supply chains ensure strong profitable growth in this business climate.

To increase your adaptability as a supply chain leader, I suggest embracing these eight factors.

1. Uncertainty - Uncertainty and risk have become a part of the “new norm” and a reality of today’s business climate.
2. Volatility - Sharp and irregular fluctuations occur as a result of mergers and acquisitions, marketplace turmoil, commodity, costs, competitive innovation, demand fluctuations, energy pricing, exchange-rate charges and similar occurrences.
3. Rapid Change - Uncertainty and fluctuations in your business environment will happen quickly. Free trade and globalization take this rapid rate to make obsolete any five-year (or even one-year) planning cycles.
4. Culture - Adaptive companies must be tolerant companies, or barriers to adaptability will limit the opportunities for profitable growth.    
5. Scope - Take a look at the big picture. Adaptability of an organization is not as important as the adaptability of that organization’s end-to-end supply chain.
6. Time Frame - If you are trying to predict the short-term future to become more adaptable, consider using business intelligence, mid-term predictive modeling, rolling forecasts, and long-term scenario planning.
7. Responsiveness - Responding quickly with a good response is better than responding slowly with the perfect response.
8. Financial Sync - Better decisions are made with better information, and we need to use financial adaptability as a prerequisite to achieving organizational adaptability.

Adaptability also requires that your ears stay finely tuned to the change happening around you. Success will go to the most resilient – not to those who rely merely on tradition for the sake of tradition.

Go!Go!Go!

Jim
 

More Resources 

The Adaptive Supply Chain: Today's Mandate for Profitable Growth

Material Handling & Logistics: Adapt for Today, Live to Handle Tomorrow

Global Supply Chain Expert Stresses Need for Adaptability in 2012

Book: Bold Leadership for Organizational Acceleration

Times have changed. Technology continues to advance and companies pursue each and every opportunity to integrate the latest and greatest.

New generations of smart phones and tablets are being developed at a rapid pace – sometimes before some of us even realize that the technology is already outdated.

If you are like me and did not grow up with these capabilities, then the idea of the latest and greatest technology can sometimes give you a headache.

But today, I am excited about a new technology for supply chain and warehouse managers. In a nutshell, you can now use your smart phone or tablet-computer to get real-time updates on facility material handling system health and operational metrics.

Imagine being across the country – or across the world, for that matter – and be able to instantly know that your shipping sorter is backed up, or a pick-to-light opening is empty, or that your facility has just achieved record order efficiency.

Want to know the status of orders shipped versus orders planned? That, too, is just a few keystrokes away with this new technology.

So, there you have it folks. If you are able to walk around with your warehouse in your pocket, what else might you be able to do in the future?

Go!Go!Go!

Jim

More Resources 

Tompkins' New Mobile Dashboard Puts Warehouse Technology at Your Fingertips 

Introducing: T-MD

Adapt for Today, Live to Handle Tomorrow

Tompkins Warehouse Control System