As the global economy slows, firms are breaking traditional moulds for savings. But there are pitfalls for purchasers if they don't have long-term clear strategies. Cisco, the world's leading supplier of telecommunications network exchanges has outsourced all of its manufacturing. Such a strategy means the brand becomes the company's most valuable asset and procurement professionals become the driving force for maintaining the image. In this respect, because of their skill at negotiating and contract management, the next several years may see procurement staff becoming some of the company's most valuable employees.
David Arminas
The Value Demand Manager will emerge at company Board level and will possess an array of commercial, financial, information technology and related technical and people skills necessary to manage effectively the key business process of acquisition. Continuously monitored for contribution to the business, benchmarking will be against world class competitors.
The mechanisms for making routine deals will be outsourced largely to e-commerce specialist organisations. They will achieve scale economies by using global supply chains. Rather than the activity itself, the Value Demand Manager will concentrate on managing the process and its delivery, and on relationships with the key third party supply resources, including those to whom activity has been outsourced.
The drive to optimise costs will be a continuous process in successful organisations. Procurement influence will shift from the 'how to' approach to strategic integration into total value demand management. The focus will be on effective investment appraisal and the value brought to it by the acquisition process, which will achieve visibility throughout the supply chain. The emergence of value demand as a concept will lead to early cost savings as the power of an integrated approach to the acquisition process becomes apparent.
In this environment, Procurement will have truly integrated into the mainstream of business strategy.
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