In the 1980s and 1990s companies concentrated on “strategic sourcing,” which author Robert Handfield describes here as basically reducing the supply base and nailing vendors to the wall until they grudgingly granted ruthless cost reductions. The results were short-lived savings and long-term ill will. In other words, the whole exercise was not very strategic at all.
Which brings us to 2006. What's needed today, argues Handfield in his new book Supply Market Intelligence, is to deploy the supply function into a strategic corporate advantage, developing long-term relationships with suppliers that produce significant cost savings and knowledge sharing via creation of a supply market intelligence network.
This book makes a convincing case for a much stronger approach to supply management than most companies have considered in the past, and puts the burden squarely on the shoulders of operations executives to make this case in their own organizations. “As we move into the 21st century, supply managers will be asked to seek out new technologies and new suppliers more often and to think outside the box while continuing to ensure quality products and services,” the author writes. This means supply managers will work more strategically, evaluating potential suppliers not just on yield results but also by assessing strengths, weaknesses, and long-term quality output.
A detailed step-by-step approach through the program is provided, including how to assemble change teams; assessing the current situation; what it means to develop market, business, and supply intelligence; evaluating suppliers; developing strategies for the various sourcing components; relationship building; and benchmarking. Thorough compilations of guiding principles and best practices are also included.
Handfield is a consultant and the Bank of America Distinguished University Professor at North Carolina State University.
- Sean Silverthorne