While procurement has become far more effective at negotiation, cost cutting, and contract management, few supply chains are meeting their strategic potential. Now, two supply chain thought leaders distill all that’s been learned about strategic sourcing, helping you orchestrate supply chains to create differentiation, increase value, and sustain competitive advantage.
Presenting the newest research and practitioner experiences, they show how to transform the supply chain activities that have the greatest upside potential. You’ll start by learning how the field’s leaders are building more effective strategic sourcing teams and managing them more effectively. Next, the authors guide you in moving toward increased customer-centricity; aligning with Tier 1 suppliers to promote shared long-term profitability; and systematically redesigning even the most complex global supply network.
You’ll find new best practices for protecting against potential supply chain disruptions from any source; anticipating shorter product lifecycles and other challenges; evaluating potential opportunities to reshore, and more. Throughout, this guide focuses relentlessly on helping supply leaders deliver value, gain a true strategic role, and take their “seat at the table.”
- Develop stronger, more resilient supplier relationships
Build partnerships where buyers and suppliers can truly rely on each other
- Learn from all that’s been learned about global sourcing
Reach out to the world for great ideas, components, design, process, and R&D
- Protect against rapid price fluctuations in key commodities
Use futures, options, and purchasing strategies customized for changing environments
- Integrate the most advanced technology into your mindset and practices
Leverage today’s highest-value technologies in key supply management processes
The executive’s guide to sustaining competitive advantage and mitigating risk in complex supply networks
- Strengthen alignment throughout your supply chain, and with key suppliers
- Build a more customer-centric, demand-driven supply chain
- Cutting-edge research, practical experiences, and new lessons from UPS, Coca-Cola, Home Depot, Apple, and other leaders
This book can help any senior manager transform sourcing and procurement into a key competitive advantage–and keep it that way.
Two leading researchers and consultants show how to apply advanced strategic sourcing to significantly improve supply chain efficiency, effectiveness, and sustainability. Informed by their insights, you can go beyond mere cost-cutting and contract management to redesign and orchestrate your entire multi-tier supply chain.
Walter L. Wallace and Yusen Xia demonstrate how to bring together multiple business disciplines related to sourcing and procurement, strengthen critical buyer-supplier relationships, and systematically improve visibility and accountability. Throughout, you’ll find new best practices and innovations for all supply chain functions–from e-procurement to financial hedging.
Introduction 1
Notes 4
Chapter 1: Purchasing, Procurement, and Strategic Sourcing 5
Strategic Sourcing Methodology 7
Supplier Relations and Performance 16
Notes 17
Chapter 2: Managing Sourcing and Procurement Processes 19
Step 1: Determine the Type of Purchase and Level of Investment 20
Step 2: Perform the Procurement Process 21
Step 3: Evaluate the Effectiveness of the Strategic Sourcing Process 23
Supplier Selection 24
Use of the Tradeoff Analysis for Supplier Selection 27
Procurement Pricing 29
The Procurement Team and Its Contribution 32
Notes 33
Chapter 3: Strategic Sourcing and Delivering Customer Value 35
Delivering Customer Value 35
Defining Customer Service 37
The Impact of “Out of Stock” 39
Value Creation and Effectiveness 39
It’s the Totality of the Offer that Delivers Customer Value 41
Market-Driven Supply Chains 43
Identifying Customers’ Service Needs 44
Defining Customer Service Objectives 47
The Cost Benefit of Customer Service 48
Setting Customer Service Priorities 49
Setting Service Standards 53
Notes 57
Chapter 4: The Size of the Organization Spend and Financial Significance 59
Organizational Spend and Its Significance 60
Return on Investment Effect 60
Profit-Leverage Effect 61
Reduction in Inventory Investment 63
Supply Side Contribution to the Organization 64
The Mission, Vision, and Strategy of the Organization 67
The Size of the Organization 68
The Financial Strength of the Organization 69
The Reputation of the Organization 69
Notes 70
Chapter 5: Understanding Buyer-Supplier Relationships 71
Trusting a Single Source 71
An Apple of an Idea 72
A Calculated Risk 73
Keeping the Complex Simple! 74
A Foolproof Strategic Procurement System 75
Managing the Strategic Sourcing Decision: Buyer-Supplier Relationships 87
Notes 88
Chapter 6: Value Creation for Global Procurement Competitiveness 91
Spotlight on Procurement Performance 93
The Strategic Sourcing Decision: The Best Value Chain Wins 101
Notes 101
Chapter 7: Procurement under Raw Material Price Fluctuations 103
Raw Materials and Commodity Procurement Contracts and Trading Markets 105
Raw Materials and Commodities Price Forecasting 107
Commodity Procurement Strategies when Forecasted Prices Are Increasing 116
In Conclusion 122
Notes 122
Chapter 8: Supply Processes and Information Technology 125
The Supply Management Process 128
Technology-Driven Efficiency and Effectiveness 131
Building Application Layer Security into the Supply Chain 150
Information Technology Implications for Strategic Sourcing 152
Notes 156
Chapter 9: Creating a Sustainable and Environmentally Compliant Supply Network 163
A Greener Manufacturing Process 167
Initial Steps 171
Considerations for a Greener Supply Network 175
Big Picture Considerations 179
Why Sustainability? 181
Green Sourcing 183
A Green Strategic Sourcing Process 185
Building a Competitive Advantage through Collaborative Sustainability Goals 189
Corporate Social Responsibility 190
Notes 192
Chapter 10: Time-Based Strategic Management 197
Supplier Lead Times 198
Quantity, Delivery, and Lead Time 200
Time Has a Price 204
A Shift in Priorities 207
Logistical Lead-Time Network Management 208
Eliminating Waste through Streamlined Flow 210
Throughput Time Element Analysis 211
Operational Effectiveness 211
Notes 212
Chapter 11: The Use of Emission Permits in Strategic Sourcing 215
Top-Down Trading System 218
Bottom-Up Trading System 220
Linking Different Systems 224
Further Thoughts on the Subject of Emissions-Trading Systems 225
In Conclusion 227
Glossary of Related Terminology 227
Notes 231
Chapter 12: Visibility as an Attribute to Becoming Customer-Centric and Demand-Driven 233
Big Data, Greater Visibility 235
Greater Visibility: What More Can We Do? 238
Building Visibility in the Inbound Supply Chain 239
Visibility on a Cloud-Based Supply Chain Network 243
Event Sourcing Software Architecture 245
Dell’s Information Visibility System 247
Crate & Barrel’s Vision for Global Supply Chain Visibility 247
A Well-Implemented Visibility Solution 249
Notes 250
Chapter 13: Understanding the Supply Chain Risk Profile 253
Managing Supplier Risk 254
The Hidden Risks of Supply Chain Innovation 256
Growing Threats to Supply Chains 259
Mitigating Risk by Gaining Visibility in the Global Network 261
Mapping the Organization’s Internal Risk Profile 263
Managing Supply Chain Risk 266
Notes 274
Chapter 14: Reshoring: Revolution or Evolution 277
Offshoring 278
Improving the Outsourcing Decision 287
Reshoring 288
Nextshoring 291
Proximity to Demand: Localization and Postponement 291
Made in America 292
Outsourcing Services 293
Benefits and Risks of Outsourcing Services 293
Outsourcing Challenge 294
Classification of Business Services 296
Offshoring’s Future 297
Notes 298
Chapter 15: Supply Chain Network Design and Analysis 301
Responsiveness 301
Reliability 305
Resilience 310
Relationships 316
Concluding Remarks 322
Notes 322
Index 325