For many years, many strategic sourcing and procurement professionals have been using the cost reduction playbook as a guide for all of their sourcing and procurement activities. While cost reduction will always be a big part of procurement, the current trends are making their jobs much more demanding due to the value driven supply chain with the customer in mind. VALUE for the customer, as defined in the Supply Chain Quarterly is: The customer never buys a product, the customer buys the satisfaction of a want, which in economics is defined as value.
THE GAME CHANGER…VALUE PROCUREMENT
Procurement officers are under pressure to deliver value added performance. They are just as responsible as every other business unit to conduct all activities with customer satisfaction at the forefront of every decision. This change is now also influencing corporate strategy. With the growing customer focus and as more influence is exerted on corporate strategy, many organizations are looking towards technology and the right tools to help them drive value by providing visibility and quality control in real time throughout the entire supply and value chain. By having access to real time data, the executives are able to make decisions and react and fix problems before they become bigger problems when a defective product reaches a customer.
Companies are looking for greater insight and with use of the cloud, and real time data and analytics, information is now available and allows them visibility into categories such as spend, risk, and performance. This access to accurate, real time business intelligence can now provide necessary support for decision making. The value of this insight also provides organizations with better compliance to contracts and rules, hence better negotiations.
SERVICE CHAIN VS. PRODUCT CHAIN
The technology driven organization can increase customer satisfaction and retention. The fact that they are able to exert more control over their business through more visibility and control in their supply chain translates into customer satisfaction beyond the product chain and well into the service chain. We all know how painful it is for customers to routinely experience shipping delays, shipping errors, and products that are out of stock. Customers are more and more demanding from pre-and post-sales service for the items they purchase.
Following the customer experience from pre-and post-sales service supply chain activities will emerge as the big winners over their competitors who might be focusing only on the product side and fail on the service side. This message was underscored by Apple CEO Tim Cook, in his apology to consumers in China for the company’s perceived failure to listen to customer feedback for post-sales service.
THINK: CORPORATE EXTERNALITIES & IMPACT TO THE CUSTOMER AND SOCIETY AT LARGE
As stated by the author Sukhdev in his book Corporation 2020, corporate externalities – defined as the impacts of an organization’s manufacturing and business processes on other segments of society – and the need to disclose those externalities. Translate this into how the right technology can help procurement and strategic sourcing officers measure and report the effect of all large supply chain transactions. There is an increasing demand from the customer to have full transparency on these impacts.
Looking into the future trends of procurement and supply chain, there is no doubt that a shift will occur for those professionals in terms of content and certifications. The nature of work and its complexities and need for multi-language skills, and different geographies is now forcing the new generation of procurement officers into the seamless globalization of supply chain knowledge work.
The goal is to minimize risk and protect your brand and reputation by making sure your supply chain is focused on your most important asset: THE CUSTOMER