by chiefstaff

September 26, 2011

hudgeon12By Doug Hudgeon

The Cost Reduction Tip

Over the past 12 years I’ve looked at the sourcing, procurement and payments processes in 150+ companies spanning every continent except Antarctica. At a detail level, the best of these companies took very different approaches to managing their suppliers – approaches tailored to the subtleties of their industry, geography and economic climate.

But the best shared one common trait: Their supply chains were as simple as possible given the constraints of their operating environment.

That’s not to say they weren’t sophisticated – often they were (in a surprising number of cases they were not) – but they were all simple.

Commonly, but not universally, the best companies regularly tendered categories that didn’t matter much. Commonly, but not universally, they would set up longer term relationships (with both parties incentivised to meet a common goal) in the categories that were critical to their ability to deliver value.

In all categories, their sourcing, ordering and payment processes were as invisible as possible. Many of the best companies did not even view their supply chains as strategic. I

n their drive to reduce costs, keep their operations as simple as possible and eliminate bureaucracy they just ended up with an efficient supply chain.

Doug Hudgeon who is lawyer and vendor management professional who has branched into finance and accounting shared services management.


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chiefstaff

MORE INTERESTING READING
  • Will simplifying the supply chain process overall performance will usually be enhanced?

    will be waiting for your response
    Thanks

  • Thanks for sharing such a useful tip to reduce cost. I’m in the process to analyze my business process and I’ll keep this tip in mind while working on it.

  • I actually really appreciated the information in this post. I liked your point about the simplicity of Supply chain as you said in this line of the blog “keep their operations as simple as possible and eliminate bureaucracy they just ended up with an efficient supply chain”. I think that it would be important to have proper procedures put in place right from the get-go in order to avoid problems down the road. Thanks for sharing this.

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