Value Focused Supply Management, the 21st Century Solution for Printers and Print Buyers

Value Focused Supply Management is an approach for creating and implementing long-term strategies for key purchase categories and their suppliers that go beyond just competitive sourcing. This concept was presented at the 2010 Institute of Supply Management Annual International Supply Management Conference in a major research initiative by CAPS (Center for Advanced Purchasing Studies) Research and A. T. Kearney, Inc., entitled “Value Focused Supply - Linking Supply to Competitive Business Strategies.”

Basically, what this means is an organization must go beyond just adopting a competitive buying program to reduce costs. According to e-LYNXX Corporation Chief Executive Officer William Gindlesperger, organizations also must institute a technologically sophisticated program that includes executive level involvement, centralized purchasing, strategic procurement, total transparency, data/information collection and analysis, greater efficiencies, strengthened controls, enhanced flexibility, increased competitiveness and ensured fairness in the process. The ultimate goal is to improve the overall competitiveness of an organization by adding additional value for both customers and shareholders.

Looking back over the past 20 years, according to the CAPS research paper, it is clear that competitive sourcing created significant value for companies, driving major cost savings directly to the bottom line. However, the widespread use of competitive sourcing techniques and tools has eroded the major advantage that it gave pioneers in the 1990s. A.T. Kearney has found that the savings gap between leader and follower companies had shrunk by half just since 2004. “Just saving money on external expenditures will not be enough to survive, let alone thrive in the years to come,” the CAPS-Kearney research concluded.

To achieve Value Focused Supply Management, an organization must move beyond traditional procurement approaches that are driven by buyer-vendor negotiations in which the buyer looks to a limited number of vendors in hopes of getting preferred pricing, quality and on-time delivery. Traditional approaches can only deliver two out of the three of those objectives. To ensure quality and on-time delivery, prices are typically high. Prices may be reduced if quality or on-time delivery is compromised. The two out of three approach runs counter to Value Focused Supply Management where all three—quality, pricing and on-time delivery—must be expected on every purchase.

This requires new technology, which Gindlesperger said is now available. The new technology plus the use of procurement best practices will allow an organization to get reduced pricing without compromising quality or on-time deliver. It also provides total transparency, data/information collection and analysis, greater efficiencies, strengthened controls, enhanced flexibility, increased competitiveness and ensured fairness in the process.