Leveraging Your Supply Base
August 02, 2010 - SCMR Editorial
When the subject of “leverage” is mentioned in a procurement department, it usually refers to bundling of internal needs to create as much buying power as possible. That’s a good and valuable concept. The purpose of this post is to suggest another, equally-valuable perspective on “leveraging your supply base.”
Leading companies often take advantage of a powerful source of competitive advantage: preferred relationships with their suppliers. Research shows that these customers receive preferential treatment from their suppliers in two important ways:
1. Direct investment made by the supplier to benefit a single company, such as dedicated capacity, exclusive use of a new technology, or key engineers assigned to the customer’s product development teams.
2. Exceptional service, such as preferential scheduling of orders, more frequent deliveries, better pricing, shorter lead times, and similar advantages.
Are you the type of company who consistently receives preferred treatment and investment from your suppliers? Or are you “just another customer” - one of the many who fail to capture the benefits that a world-class supply base can provide?
Do you even know how to “leverage your supply base” in this regard? Where would you start? A great first step is to survey your supply base.
If you find this topic intriguing, you can download an information sheet at the Greybeard Advisors website:
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