One of the presentations at the 6th Annual International Symposium on Supply Chain Management was a presentation by Bob Engel of Resources Global Professionals that summarized his 10 Fundamental Strategies for Exceeding in Supply Management. Although you’ve probably encountered all of these strategies before on this blog, they are worth repeating. They are:
- Establish a governing council
Those companies that establish a governance council are the companies that excel.
- Align the supply chain organization
The theme here is centralized consensus with decentralized execution, as this gives you the best of both worlds.
- Recruit supply chain professionals
You need to focus on strategic thinking in both recruiting and incentivizing. For example, if you decide to base an employee’s bonus on the number of purchase orders cut, guess what’s going to happen? That’s right! Every item on Engineering’s Bill of Materials is going to become its own purchase order.
- Set the strategic sourcing strategy
Strategic Sourcing is the cornerstone of Supply Chain Management.
(And Spend Analysis and Decision Optimization are the cornerstones of Strategic Sourcing.)
- Establish key supplier alliances
It’s not SRM … it’s Alliance Management, especially on strategic and complex categories. It’s a partnership (and that’s why we are finding that mutually accepted common scorecards work.)
- Manage total cost of ownership
TCO needs to be the mindset.
(At a minimum, if it’s a strategic or complex category, you should be focussed on TVM.)
- Manage compliance and risk
Consider a recent Aberdeen Survey that asked the question “How do you manage your company’s contracts?” to 150 fortune 500 CXOs only to have 100 of these fortune 500 CXOs respond that “We can’t even find them, let alone manage them!” … that’s a problem! (Need a solution? E-mail
the doctor <at> sourcinginnovation <dot> com.)
- Optimize company-owned inventory
Remember, with an average holding cost of 20% to 48% per annum, inventory is money.
- Gather information on a timely basis
Good data is timely data.
- Establish processes and controls
And once you simplify processes and controls, so that they are easy to understand and execute, they key is to select complementary technologies that enable them! (And not the other way around!)