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Strategic Procurement

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Strategic Procurement

Organizing Suppliers and Supply Chains for Competitive Advantage

Kogan Page,

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Spending is hard, buying is harder: Supply Chain Management 101.

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Editorial Rating

7

Qualities

  • Applicable

Recommendation

Believe it or not, logistics can be exciting, especially when presented in a flowing, concise essay spiced with case studies and examples from the author’s experience. Procurement specialist Caroline Booth makes her points clearly through great organization, vivid stories and effective charts. While some chapters would benefit from some refined editing, readers can appreciate and implement her message about the importance of procurement. Managers can easily follow Booth’s suggestions on using third-party providers to complement their businesses’ core activities. getAbstract considers this valuable reading for senior executives and supply chain managers who want to elevate the role of procurement and make their firms more profitable.

Summary

Know Your Suppliers

A supply chain is a sequence of activities that delivers a product or service to an internal or external recipient. In some cases, suppliers assist other suppliers. Procurement is a big part of most companies’ budgets, but many senior executives have no idea how much their suppliers cost them. When asked how much his bank spent on vendors, one executive replied that the figure could not be much since the bank did not manufacture anything. He was wrong. In the late-1990s, his bank spent £2 billion on check printers, automated teller machine mechanics and other suppliers crucial to the bank’s operations.

Many firms outsource services they once handled in-house to mitigate potential risk to their reputations in case of error. This tactic fails because, in the event of mistakes or mishaps, customers and the public will always blame the corporation, not an anonymous supplier.

Executives must know how much they spend on third-party providers in three areas:

  1. “Direct expenditures” – The cost of buying the goods needed to make or support the product or service a firm sells, including all manufacturing materials...

About the Author

Procurement specialist Caroline Booth has worked internationally for Shell and Ernst & Young.

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