At a time of unprecedented supply chain volatility, global disruptions and sky-high commodity prices here comes an aptly timed book which brings to centre-stage the biggest area of concern and source of competitive edge for companies – sourcing and procurement
Profit from the Source, as the name suggests is an absolutely absorbing and a must-read book for all CEOs and COOs who are leading sourcing, supply chain and procurement functions and makes the valid case that for an area that eats up half the cost of a typical company’s budget it gets little to no attention from most CEOs.
Product development, agility, innovation, uninterrupted supply chains and sustainability – for every CEO this is the mantra; however, little do we realise that this source of competitive edge lies not within us but across our vendor partner matrix and unlocking that is the key to a sustainable competitive edge. For this to happen CEOs must make procurement one of their key strategic goals and personally lead it and in this process make the procurement/ sourcing function central and a seat at the leadership table and recognising that sourcing is not just about costs.
The authors have very lucidly outlined the three pillars to make this transformation. 1. What the CEO must do (as they rightly say unless the CEO gets behind this, it’s not likely to happen!). 2. What the company must do (the structure and mode of current method of procurement needs re-examining), and 3. What the company’s eco-system must do i.e. the suppliers and vendor partners. A very valid point they make is that profiting from source is not just one-way: companies benefit but suppliers also can benefit immensely if they align themselves to this objective. Making all these stakeholders realise the benefits is again the CEO’s responsibility.
Through their years of consulting experience at BCG and client and colleague feedback, the authors have outlined ten practical principles covering these three pillars which can guide any CEO in making the change and deriving maximum benefit. What is more heartening and important is what they quote, “No one has implemented all ten. But even if a few are done and sustained the benefits we have seen are immense.”
Some particularly striking and valuable messages from the book which have stood out for me are (and I quote) “Treat your suppliers as friends. Forge dynamic relationships with your most import partners. Far too often this relationship of supplier–buyer is antagonistic,” or “Empower your shoppers. Put your procurement team at the heart of your product life cycle or “Achieve breakthrough innovation by pooling in your R&D costs with that of your suppliers”, “Anticipate the inevitable. Halve your risks by working with your suppliers to predict the unexpected,” “Settle for perfection. Deliver unbeatable quality. Remember when customers complain about quality, they don’t blame suppliers. They blame the company,” and most telling of all, “Share your tomorrows. Become truly sustainable by allying with your key suppliers to meet the ESG goals and create a better supply chain.”
Five important pillars
With numerous examples from across industries diverse as automotive to fashion the authors make the point that sourcing, and procurement is about making suppliers as partners and make them integral in the process as early as in the ideation stage. It also is about changing the way organisations are structured and for teams to be cross-functional. The book is an easy read, has examples which we can all relate to and summarizes each of the five important pillars of procurement with key strategies as well as notes to the CEO and the leadership teams on what they can and should do.
As a long-standing believer in the power of sourcing as an edge and as someone who has been practising some of the principles of what this book preaches, I am delighted to see that finally this issue is being written about. I’ve discovered newer areas to build focus on and I recommend this as a must have for all leaders and if there’s one takeaway, I would leave with from this book it’s that CEOs must know their suppliers as well as they know their customers!
Check it out on Amazon.
(The reviewer is MD, Indian Terrain Fashions Ltd)