This week, major manufacturers are finding themselves out of stock on crucial production materials due to the coronavirus. Not only is there pressure for them to offset the immediate financial impact, there’s also urgency to show steps are being taken to protect their supply chains from future trade disruptions.
Delivering the best possible quality to customers with the minimum possible input costs has always presented executives with a difficult balancing act. But the growing importance placed on quality and freshness in buying decisions and overall rising consumer expectations are creating more pressure than ever to source the best raw materials without increasing costs.
To make things even harder on buyers, most companies operate with very lean procurement departments. For a relatively small team with limited bandwidth, it’s a big enough task just to manage the basic procurement functions week to week. Lack of time and resources inevitably results in a less granular focus across categories and on individual items. This doesn’t only lead to missed opportunities at the point of execution. It creates a broader issue when leadership can’t find time to fully assess performance and leverage that insight to inform and enhance sourcing strategy.
Despite all of this, when there’s uncertainty around the direction of the global economy, procurement is often the first department to get handed down the directive for a substantial cost take out. For procurement teams that have already looked everywhere for savings, how can they reduce costs even more without sacrificing quality and freshness of raw materials?
