Especially in direct, as Bob and I explained in detail in our Standard Sourcing Solutions Don’t Work for Direct.

While simplistic, almost obvious, and not prescriptive, it was nice to see a recent article over on India Shipping News that echoed some of the reasons why procurement must align with fulfillment in modern supply chains.

It noted that in today’s supply chain environment, for the ecosystem to function in a seamless manner, there needs to be perfect alignment between the procurement and the fulfillment networks.

One must remember that the outcomes of fulfillment are directly impacted by the Procurement decisions. These mainly include delivery, order accuracy, and inventory availability. The procurement strategies must also be informed by the fulfillment insights, which include delivery performance and demand patterns. The operations have now transformed from being independent to following a more collaborative approach.

And we still haven’t mentioned inventory levels. In retail, 8% stock-out is the traditional average. That’s a lot of lost revenue, and in low margin industries, quite a lot of lost profit. Without alignment, organizations’ unnecessarily lose money customers would be happy to give them while losing money in stale inventory that has to be fire-sold or discarded because the organization has too much of some products and materials and too little of others.

Now, the organization’s don’t have to merge, but they have to align … and the way that happens is through shared data, shared requirements, shared goals, and shared alignment. Fortunately, with today’s systems, data can be shared across the organization in real-time. With on-line collaboration, there’s no excuse for people not to come together and outline all of their requirements and ultimate goals. And there’s no excuse for the organizations to not get together and align on what’s the most critical, and for them not to go to their common boss (the CFO) and bless the rankings on the alignment (that will be used as weightings in optimization). Once you have the goals, the rankings, and the weightings, both sides can use optimization to make the right decisions that takes the needs of the other party in mind. (In fact, there’s no excuse for all of Procurement, Logistics, Supply Chain, and Inventory Management not to be 100% aligned at all times with the tried-and-true proven tools available today.)

In other words, not only must Procurement align, it can align, and there’s no reason it shouldn’t be aligned.