New CEO Study Good for Sourcing

December 5th, 2007 at 06:22am David Bush - Iasta

Recently, Supply & Demand Chain Executive reported on the annual 3PL CEO survey by Penske Logistics and Northeastern University. The survey, which found that many CEOs are optimistic about global expansion opportunities and the overall growth prospect for the industry, also had some good news for Sourcing:

• 87% of survey respondents indicated that procurement is more involved in the logistics provider selection process than ever before
• 87% of companies have taken steps to address the pressures of more service for less and pricing pressures - an area where procurement can play a key role

The fact of the matter is that procurement should not only be involved in logistics provider selection, but should be involved before the award is made since logistics costs can often more than offset the expected savings from switching to a new supplier if not taken into account during the award process. That’s where modern strategic sourcing decision optimization technology comes into play. It allows you to make sure that the award will have the lowest total cost - and that you don’t make an award that actually costs more than the award you made last time because you failed to factor in more expensive transportation costs and import / export duties.

Furthermore, only procurement is in the right position to address the severe price pressures being placed on an industry where more is constantly being demanded for less. The only ways you can increase service without decreasing profits are to increase efficiency or decrease costs - and this is what procurement excels at. As more and more companies begin to realize this, we should see a brighter dawn for procurement.

Entry Filed under: General, Optimization, Supply Management Best Practices

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