Procurement Excellence in Manufacturing: Maximizing Profit and Driving Increased Quality
Building strong relationships with key suppliers helps to ensure consistent supply and quality of inputs. Ed Cross, executive director of procurement services, Xchanging, reported for IndustryWeek. A well run, proactive procurement organization working closely with other functional areas in the business and third-party suppliers can help drive significant benefits that materially impact the company's profitability and cash cycle, and thus, the overall return on investment.
For many large manufacturing firms procurement is a missed opportunity. Executives are often concerned about linking sourcing success to financial business outcomes, such as operating profit and working capital -- unsure of the proper systems and processes to create this linkage -- and this applies inertia to procurement innovation efforts. Further, financial executives tend to look at categories of spend individually, such as raw materials, machinery, plant/facility services, utilities, and MRO. Executives rarely see the magnitude of overall spending that these categories represent, but when added together, these categories often amount to between several to hundreds of millions of dollars, depending on the size of the organization.
A procurement team can make a significantly positive impact to the level and quality of inventories that will result in lower investment requirements, more efficient production, better utilization of factory floor space, and better service and product to the customers -- in other words, affecting the entire production and cash cycles. Learn more: bit.ly/1itGNnB