Supply Chain Management: The 4 Procurement Strategies You Need

4 minutes   |  BUSINESS & MANAGEMENT

Want a sneak peek of the content you can expect to find on the UCT Supply Chain Management online short course?

Have a look at this strategic guide to managing procurement, and download the infographic located at the bottom of the page, taken from Course Module 3: Procurement Management.

In this module you’ll learn about the role of procurement in the supply chain, as well as how to optimise the procurement process to secure a competitive advantage.

 

“The job of a strategist is to understand and cope with the competition. Other than industry rivals, there are four unknown competitive forces.” – Michael Porter

 

1. Market knowledge in the supply chain management field

Supply chains are customer-centric and to be a successful Supply Chain Manager, professionals need to understand how the rise of emerging foreign markets and technology will influence product value. Here are four points to consider:

  1. Emerging markets, particularly from Asia are experiencing increases in product competition.
  2. Technology advances making it easier to produce products both faster and cheaper.
  3. Consumers are more aware of substitute products which influence the supply chain buying behaviour.
  4. Consumers are able to force down prices and increase costs by demanding higher quality and faster service time.

 

2. The relationship between Supply Chain Managers and suppliers

In the US, the top 100 manufacturers spend half of every dollar on purchasing materials.1 Businesses rely on suppliers to reduce costs, improve quality, innovate the product and produce it faster. The supplier role in supply chain management is also heavily influenced by this rise of emerging global markets.

To counter this, businesses are more dependant on suppliers than ever before. It’s becoming increasingly important for supply chain management professionals to consider the following key outcome:

Building a strategic partnership is the lifeblood of a successful supply chain. Click To Tweet

 

3. The winning steps to supply chain negotiation

Negotiation is a key skill in the supply chain management field. Here are six steps to help you run an efficient and effective process:

  1. Time: Average negotiators are rigid in their approach. Enough time for preparation means you’ll be able to discuss the items in any order and be flexible.
  2. Preparation: When preparing, consider the impact on the business: how the supplier views the business, how flexible you can afford to be, and use open questions.
  3. Mapping: Map out all the possible questions and responses that could occur before entering the meeting. Also, map out the agenda – this way, you’ll manage to cover everything you need to, as well as counter anything that the supplier brings up.
  4. Style and personality: Personality type and negotiating style are all key factors in building rapport and managing behaviours in negotiation. Skilled negotiators tend to be unpredictable. Match the opposition to build better rapport.
  5. Defined targets: Set targets for each variable – it’s not uncommon for negotiators to lose sight of their objectives. Having clear goals from the outset will control the extent you move away from your settlement point.
  6. Statement: A clear, well-rehearsed opening statement is essential. It sets the tone for how your opponent perceived you as you move forward through the negotiation process.

Common Error 1: Being overly competitive.

Common Error 2: Focusing only on price and margin.

4. The new supplier relationship 

To gain the advantage in the supply chain management industry ensure you’re able to follow these four steps towards creating a stronger supply chain relationship:

  1. Reward your contractors
  2. Know your vendor
  3. Hire managers with excellent commodity market knowledge
  4. Identify competitors early on

 

Source:

informit 1