The Future of Supply Management

To explore the future of supply management, A.T. Kearney joined forces with CAPS Research and the Institute for Supply Management. ¹ The study, which builds and expands on research these organizations performed more than a decade ago, reveals that much has happened to change the world of business, and supply management in particular. The following are seven areas that will be critical to future success:

Developing category strategies. As sourcing takes on a more strategic role, companies will consider factors that go beyond cost and quality, such as innovation and operational excellence. Category strategies will also affect geographic sources, with China, India, Eastern Europe and Brazil becoming more popular markets while sourcing from the United States, Canada and Western Europe declines (see figure) .

Managing suppliers. While supply has traditionally focused on the bottom line, the challenge in the future is to build deeper and more collaborative relationships with key suppliers that can contribute to the top line as well. More than 50 percent of survey respondents say they will reduce the number of suppliers they work with to focus on their most crucial suppliers.

Designing and operating multiple supply networks. To support their competitive priorities, companies will have to establish and maintain more diverse supply chains. Some will be segmented by product; others will be distinct to particular customers or geographic markets.

Leveraging technology enablers. Web-based tools will enable companies to capture and share operational information across the supply chain. End users will perform routine purchasing activities through electronic catalogs with the same look and feel as today’s consumer-oriented sites.

Collaborating internally and externally. Supply management will deepen relationships with other corporate functions, such as information technology, marketing and sales. Externally, companies will work more closely with suppliers to streamline processes and create new products and services.

Attracting and retaining supply talent. Supply’s evolving responsibilities will require people with new skills and capabilities. For example, cost-focused “hammer” personalities will need to make way for people who can readily adapt to different situations and cultures. Leadership ability, a collaborative style and an innovative spirit will be as important as procurement experience.

Managing and enabling the future supply organization. Companies will have to balance the advantages that centralized coordination offers with the need for local responsiveness as they base more supply activities and personnel in developing countries.

Onward and Upward

Less than a generation ago, the procurement function’s leader was typically a director who reported to a vice president who reported to a member of the executive team. Today, supply management has a seat in the executive suite and sees its responsibility constantly increasing onward and upward to meet the challenges. It’s a way of life in supply.

For the study findings, see Key Supply Strategies for Tomorrow at www.atkearney.com or contact

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¹ CAPS Research is the Center for Advanced Procurement and Supply Research.