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What are the 3 biggest challenges faced by supply chain/purchasing professionals today? (Survey Result 12)

Romeo, Supply Chain Manager, Bruges, Belgium

Answers (32) Avi Cohen

Director of Operations @ Flavor First

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Weeding out the weakest link. Sometimes it's easy to spot them. However, it might not be as easy to replace them. Trying to find a replacement for your bottle neck or weak link can be a challenge. The weak link that you are currently working with, at least you know what you are going to get... Where as if you try to replace them, you might end up in a worse spot.

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Bryan C Webb, P. Eng.

► Technical Product Marketing & Sales Professional ◄

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1) A lack of senior management support to make purchasing a profit center. The claim" Purchasing just happens. It's fine." Nobody is looking for ways to go lean and reduce cost.

2) An inabilty to concentrate on analysis of perfomance metrics due to chasing paper trails to "fix" quality-issue problems that can be eliminated and give back "lost" time for more important tasks; ie: vendor relationship building..

3) Looking for the "big/long/expensive" (ERP) project when small improvements that don't rely on EDI can give immediate results.

4) Getting all the teams to play together: senior management, purchasing, finance and IT.

Bryan C Webb, P. Eng. also suggests this expert on this topic:

David Kuehner

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Eric Hawkins

Flight Supervisor at UPS Airlines, Experienced MBA

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1. A cash management strategy that prolongs payment on payables. This strategy hurts otherwise positive strategic relationships that provide and value and cost savings over the long run.

2. A sales and marketing strategy that offers consumer options at a cost to lean manufacturing and long-term product designs that allow supplier to deliver quality and have advance planning for the engineering and design phase of the product development cycle.

3. A less humane approach to forming relationships just short of a partnership that enrich the business experience and promote sustainable profitability and return to shareholders.

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Steven Hall

Senior Supply Chain Manager

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Hello Jon - another good question. Here are my 3 issues:

1. C Level understanding of total cost. By this I mean total cost of poor quality and rework, extra management to get a vendor to delivery properly, cost of returns excess inventory, etc. The cost of the item is usually the least amount of the total cost I deal with, but its the only thing the CEO wants to discuss.

2. C Level understanding of S&OP. The days of the sales person just saying to order it and they will sell it are over. The cost of excess inventory is to substantial. The sales force needs to understand their commitment to stock levels and they must understand the items that risk stocking out due to the low volume/high MOQ requirements.

3. Organizational understanding of IT and how it can make life easier. Building the system to support/streamline the process is critical to repeating the process at higher volumes as the business grows.

I have worked for several organizations and they all seem to have these basic issues, which also seem to correllate to over stock situations, delayed deliveries/high chargebacks-returns and lower than expected profitability.

Regards,

Steve

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Chetan Kumar

Entrepreneur

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1. Non-recognition as an important function. This happens all the time and I have seen in one occasion being headeed by a senior person who fell out of favour with the top layer of the organization (It was clear that he was on his way out and this was the last step in his exit "process")

2. Heavier influence of the Finance in decision making

3. Above two leading to lesser say in other issues a) related to tools (IT) being used in their process b) initiatives not being gives due inportance (like having an infleunce on final outcome of the operations) c) being side-lined in general

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Andie Albarr

Supply Chain Management Professional

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Jon,

The 3 Biggest challenges are:

1. Continued growth of supply chain channels causing higher trade costs; Availability of lower cost, similar alternatives; Supply Chain channels demand unique products & packaging combinations; rising service requirements from purchasers

2. Consumer expectations for greater variety of products; Globalization forcing need to explore new markets

3. Stricter regulations on traceability / reporting on food quality and safety; Safety concerns erode consumer confidence.

Rgds,

Andi

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Sham Kumar

Deputy General Manager with Emaar MGF Land Limited

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Biggest challenge in supply chain/purchasing is the non-recognition of this team as frontline function and being treated as support function

Secondly, the unplanned, unscheduled and incomplete information from user funtions often leads to curtlailed timelines and pricing which ties your arms in decision making

Thirdly, always one programme of management in assinging this function of reducing the cost instead it should be linked to cost efficiency wherein you map the investment vis-a-vis the revenue by way of Cost benefit analysis, or idling time, or first mover advantage which can be reflected in total case study and not by judging the decision making or ordering

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AK Eagle

Independent Logistics and Supply Chain Professional

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1. Inadequate preparation for major interruptions in supply and/or distribution events.

2. Inadequate anticipation of near/mid-term supply and distribution disruptions.

3. Inadequate understanding of the strategic benefits of being prepared for upcoming disruptions in 'just in time' supply/distribution pipelines.

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Stefanie Tavernier

Purchasing Manager at Ursa

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I fully agree with what Bryan and Cheetan already mentions.

Recognition of purchasing as a part of the supply chain is something that is very difficult in an environment that is not fully aware of the potentials in purchasing. Purchasing and Supply Chain is much more that cost savings on price. In such environment it is difficult to bring your supply chain performance (incl purchasing) to the next level. Internal marketing about the function and promoting its results is in my eyes the only way you can change this slightly.

Externally, I do not see immediate issues. If you managed to establish good relationships with external partners, "the sky is the limit" :-)

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Anurag Srivastava

Operation Head, Aprajita Technologies

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Hi Jon,

Straight forward three biggest challanges are:

1: Lack of Information

2: Lack of Commitment

3: Lack of Professionalism

I hope this helps.

Regards,

Anurag

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Marco Pracchini

Purchasing Manager MRO and Services at Ideal Standard

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1) Lack of Top Management support

2) Very short term (12 months or less, in my experience) projects pay back

3) PPV Analysis: just a few companies consider TCO. Nowadays, measuring savings (and inflations!) in terms of (Price Product A 2008 - Price Product A 2007) * Quantity 2008 is useless aznd misleading.

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Geert Heyrman

Junior Chief Purchasing Officer at GasthuisZusters Antwerpen (GZA)

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3 issues is very limiting... so I'll give you an overview of the things I miss to some degree within the SCM profession in general.

1) The lack of thinking about products as solutions instead of just simple products.... too few purchasers question the things they buy. Are the products bought actually the best solution to the problem/need that needs to be addressed? When I review purchasing decisions I often come to the conclusion that the biggest opportunities that are missed are located in this faze.

2) The lack of a total cost of ownership approach (not only within the company but also as a product used by customers). We should actually facilitate "optimised life cycle managed procurement". This in result will have a beneficial impact on consumer confidence and loyalty...

3) The patronizing role management in general takes toward purchasing needs to be addressed. Sometimes the procurement department has only their selves to blame. You need to earn respect through results. It can never be a goal to just survive on a administrative level. You should aim at providing services within your company on the tactical and strategic level. Purchasing departments need vision and need to formulate those visions to management. They need to set daring and ambitious objectives with regard to their field of expertise year in year out. If there is one field in business (except sales) where performance is easily quantifiable it is procurement. A good friend of mine in a senior position at Unilever once told me..... "our profit, on well established high volume products, is for 70% based on the added value created by the procurement department." Saving costs in qualitative ways is easy. Getting management to value your input is the hard thing.

4) A lot of purchasers have a hostile undertone in their communications with their suppliers. I think this is really wrong. If you donít prepare and pay too much, itís your own fault. You canít blame companies for wanting to earn more then average. We purchasers should also be driven to perform better then average. If we loose. We should be a good sport. We should focus more on creating partnerships. Instead of buying just products, we should steer the industry at creating exactly what we need. This is also the fun part... the process of creation over the boundaries of your own company. This is where the magic and true added value for society is created.

5) Purchasers need to accept, more then others, that they are part of a system and can not exist as an Island on their own. They should focus on building bridges. They should facilitate collaboration instead of slowing it down or in some cases making it impossible.

6) Purchasers need to be (just as account managers) extremely diplomatic. They need a thick skin, never take things personal, and try to be empathic whenever possible. But also act firm when needed.

7) Purchasers need to handle with care the responsibility and power accorded to them by management. Power is a tool, not an end in itself. I sometimes hear of situations were purchasers misuse their bargaining power. Very wrong.

8) As the purchasing department is in a way the back end (and front end in sometimes) toward suppliers (customers), they should sense changes in the market space, have a critical view on the core activities within a business, and alarm the company whenever necessary.

9) Purchasers should also act like COO's in a way. They have to take the bull with the horns, every time they see a process that is needlessly complicated and is wasting company resources. They should focus on creating and stimulating an environment in witch organisational efficiency, as a result of critical self evaluation is key. Not a nice to have, but an essential part of what a purchaser/Supply chain manager should be doing.

10) I could go on for some time, but if you want to further discuss this topic I'll be more then willing to do so at a later date.

Geert Heyrman also suggests these experts on this topic:

Romeo Baertsoen

manu matthyssens

Eric Joiner, Jr. , DLP

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Mihail Nedelcu

Operations Manager

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1. Cost management

2. Measurements

3. Centralization / Decentralization

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Jason Nichols

Director Import/Export Compliance & Logistics at Renfro Corporation

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I'll go with four that I see daily.

Costs-predictability & control

Disruptions-labor strikes, weather, governmental, etc.

Compliance / regulations

The constant morphing that is the world of global trade. It's a moving target...and never boring!

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Scott Furlong

Sales Director (lion, toplinked.com)

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Jon,

1. Creating an open / interoperable IT infrastructure to manage information within the increasing complex, multi-phase and multi-vendor outsourced warehousing and transportation solution.

2. Balancing total supply chain cost against risks of non-controllable disruptions.

3. Outsourced manufacturing QA/QC quality management.

Good luck, Scott

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Dave Guerra

Popular Keynote Speaker and Author of Superperformance: New Profound Knowledge for Corporate Leaders

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People Issues

Supplier-Customer Mindedness

Internal/External Supply Chain Continuum Awareness

Links:

http://www.corpusoptima.com

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Tom Napier

Senior Account Manager, Automation Division at PSI Engineering

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Hi Jon,

Good question. Not many look at purchasing which is a key cog in the business wheel.

1) Total visibility within micro and macro for purchasing professionals.

2) Integration with every division of the company. Don't forget Engineering. You have IT and upper level management but engineering integration is just as important.

3) Ease of software use. This also relates back to my first point but is different in many ways. Sometimes, depending on the company's focus, purchasers need to be computer wizards as well as great trackers to perform their function well. Flexibility is another key development in some software packages which will allow the purchaser to "force" PO's for certain reasons.

Kudos to those purchasers that do it well! :?)

Cheers...

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Romeo Baertsoen

Supply Chain Manager at Barco Medical Imaging

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Thank you Jon for this interesting question.

First of all, in my opinion, a distinction is made between purchasing & supply chain professionals.

Purchasing professionals are our ambassadors with our suppliers. Their main task is to get the correct product/service, at the correct price, within the correct time frame and with the required quality at our doorstep.

In order to realize this, they require a thorough understanding of the needs of the own company, the suppliers, cost models, manufacturing methods, etc.

They manage in most cases the biggest spend of a company and can make or break it. As such, they should be a strategic function for every organization.

Supply Chain professionals are more about creating flow from suppliers, through the own company towards customers. They heavily interact with key-suppliers, purchasing, planning, manufacturing, sales, marketing and key-customers. Main focus is on reducing working capital, increasing profit and linking the supply organization in a profitable way to the market. As such they should have their input in area's as Product Life Cycle management, decisions about in- and outsourcing and the strategic decisions about what offerings a company wants to make to the market.

Answering your question about the 3 top challenges, I see the following;

1)Focus; Defining what you want to achieve as an organization, defining a clear road map on how to get there and then go for it. Many companies get lost in a jungle of well meant initiatives that swallows all resources and gives little in return.

2)Leadership; a supply chain organization requires leadership and vision just like any other, but the leader also needs a huge set of diplomatic skills seen the wide span of internal and external partners that are involved and whose actions need to become aligned

3)Collaboration, collaboration, collaboration; both internal as external, without the different silo's reaching out to eachother, a company will find a hard time trying to excel

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Have a question for Jon?

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Menard Tete
23rd May 2014 12:14am
Using practical examples describe the challenges associated with the lack of alignment between the Logistcs supply management strategies and overall organisational strategies.

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