Supply chain procurement leaders face continuous pressure to optimize costs while supporting increasing customer demands and agility. Yet in their endless pursuit of cost savings, organizations often create unnecessary supplier risks — e.g., pushing away suppliers whose unique capabilities may be critical to their business success.
Supply chain procurement leaders must move beyond short-term cost management to leverage supplier capabilities to their maximum advantage in a structured and segmented fashion. This involves aligning supply chain sourcing strategies, driving stakeholder engagement, and setting and communicating the right metrics internally and externally to drive the right behavior.
Companies focused on short-term cost reduction strategies often fail to leverage supplier capabilities to their advantage. Supply chain leaders in sourcing and procurement should use this research to transition their focus from cost management to value creation with strategic suppliers.
Chief procurement officers who create a comprehensive risk appetite statement will enable teams to mitigate and utilize risk to maximize value creation and drive business success.
Cost optimization is a fundamental responsibility for sourcing and procurement leaders in supply chain. This research provides a framework and top ideas to optimize costs through both short-term tactical improvements and longer-term transformational changes.
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