The Hidden Asset in the Supply Chain.pdf

The debate over how to manage a procurement department and where it should be located is an ongoing one fueled by the globalization of corporations and the increasing responsibility of business units to contribute to the corporate bottom line. Depending upon a wide variety of factors to suit their specific needs, companies may make the case to operate a centralized or decentralized procurement department, or even the new hybrid—the regional central procurement department, which centralizes procurement decisions in the region where most of the operations and suppliers are located, not at the company’s headquarters.

In the world of manufacturing, there’s a particular business custom—sometimes an unfortunate one—that holds many companies back from getting the full benefit of any type of procurement operation—the practice of dictating which suppliers to use. These customers, many of which are huge, have their own specifications, their own OEMs and many times set their own prices with those OEMs, and they order contract manufacturers to purchase specifically from them.