OC Reilly Blog: Leaving Money on the Table
By Rick Chew, Business Analyst, OC Reilly Inc.
(Oct. 11, 2015)–One of the most shameful accusations that can be made in business is the charge that you are “leaving money on the table,” meaning that greater savings and/or higher profits could have been achieved – but were not, whether through inattentiveness or ignorance.
But somehow millions, maybe even billions, of dollars remain left on the table because industries, companies, and even non-profits refuse to break away from the mindset that supply chain management is just a back-office support function.
“Missed Opportunities in Supply Management,” an article in the September/October issue of Supply Chain Management Review, describes this phenomenon, saying, “The best manufacturers leverage supply management to deliver benefits such as lower-priced goods and services while gaining early access to innovative new products and technologies that will improve their products and increase shareholder value.”
The article continues, “The story is quite different when it comes to non-manufacturing and service-based companies, or NMSBCs. While they do not produce a product for which costs can be directly tracked and correlated, NMSBCs can track the impact of supply management in their operating margins and net profits if they so choose. Yet most NMSBCs have not yet fully realized the same supply management potential within their organizations as their manufacturing counterparts.
“The result, we believe, is that significant amounts of money are left on the table,” the story says.
Truth be told, the basic principles of disciplined, vigilant, knowledgeable supply chain management apply across the board, regardless of type of industry, whether manufacturing or not. What are you purchasing? How much? From whom? At what cost? Are those terms fair? Can they be changed and improved? How will results be measured and managed
Solid supply chain management – done by professionals who can execute the plan backed by experience and applied knowledge – means any organization can escape the shame of “leaving money on the table.”