Tip: Make Procurement Strategic, Not Tactical - Modern Distribution Management

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Tip: Make Procurement Strategic, Not Tactical

Strategic procurement can have a significant positive impact on a distributor's top line.
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Approaching procurement as a strategic function rather than tactical can have a significant positive effect on a distributor's top line, according to Jim Barnes, ISM Services managing director, in Industry 4.0: Technology-Driven Change.

When procurement is approached as a transactional process, by using a material requirements planning process or driven by purchase orders, it leaves little time for innovation and improvement, Barnes says. Instead, the focus is entirely on just getting things done.

But a strategic approach that includes Kanban and lean techniques to fulfill orders, for example, can have half the people of a plant owned by the same company using a tactical approach and still report higher sales, he says.

Doing this also allows distributors and manufacturers to become partners in innovation, bringing something truly new to the market and more value to the customer.

Read more about the benefits of adopting a strategic approach to procurement in Industry 4.0: Technology-Driven Change.

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