Establish a Supply Management Strategy

A supply management strategy is, very simply, an overarching plan for designing the organization, assigning resources, and aligning these resources against the demands placed on the supply chain by the business. Supply management strategies are reviewed at the highest level of the organization, and they drive a workplan that establishes how different businesses must work together to meet the organizational needs through stable and robust processes.

Characteristics of a mature, well-developed supply strategy include:

• A repeatable and well-defined process for building strategy and governance around defining, planning, managing, and receiving products and services for a business

• Clear alignment with executive vision and internal user-specific business goals

• A process based on well-developed supplier market intelligence and input from executives and internal customers

• Established goals and metrics for short-term project plans, as well as a definite five-year plan

• Established communication plan to inform senior management and all lines of business updated and reviewed quarterly against defined goals and objectives

In the next section, we cover one of these components—the procure to pay cycle—in more detail. Components of these purchasing responsibilities are often called the “tactical” components of procurement activity, as they involve management of the many daily transactions that occur as part of an organization’s external spending activity. However, just because they are deemed “tactical,” that does not mean they are not important (as we shall see).