Minding the Supply Savings Gaps

As companies strive to wring savings from their supply chains, how should managers measure the savings? One method is identifying gaps can point managers to competitive opportunities. Understatement of supply savings lowers the status of supply and reinforces the search for low-yielding initiatives....

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Bibliographic Details
Published inMIT Sloan management review Vol. 51; no. 2; p. 25
Main Authors Johnson, P Fraser, Leenders, Michiel
Format Journal Article
LanguageEnglish
Published Cambridge Massachusetts Institute of Technology, Cambridge, MA 01.12.2010
Subjects
Annual reports
Cooperation
Cost control
Cost reduction
Crude oil
Crude oil prices
Initiatives
Interviews
Price levels
Strategic management
Suppliers
Supply chain management
Transportation services
United States > US
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Summary:As companies strive to wring savings from their supply chains, how should managers measure the savings? One method is identifying gaps can point managers to competitive opportunities. Understatement of supply savings lowers the status of supply and reinforces the search for low-yielding initiatives. Overstatement undermines morale and rewards employees and suppliers for poor performance. The pursuit of savings is at the core of every supply professionals job and requires significant time and resources. At the start of any supply initiative, managers need to make a judgment call to identify the benefits they hope to achieve. Subsequently, they have to be prepared. The greatest value improvement potential exists at the need definition and specification stage, when earlier supply and supplier involvement can reveal major savings opportunities.
ISSN:1532-9194