What is it about?

The article discusses the importance of integrating suppliers into the core of a business strategy. Suppliers account for more than half of a company’s expenditures, yet they often receive insufficient attention from CEOs. Building closer relationships with top suppliers helps companies reduce costs, manage risks, mitigate supply chain disruptions, and gain insights into market trends and innovations. It emphasizes that stronger ties with key suppliers can provide a competitive advantage, particularly during times of uncertainty or crises.

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Why is it important?

Suppliers and the procurement function are pivotal to a company’s future. CEOs who empower their chief procurement officer and procurement function can leap ahead of their rivals. By using savvy supplier relationship management to make the most of suppliers’ expertise and resources, procurement executives can contain costs, drive innovation, maximize product and service quality, meet ESG standards, accelerate the time to market, and strengthen supply chain resilience.

Perspectives

Research from Harvard Business School reveals that CEOs spend only 1% of their time with suppliers, even though suppliers make up more than half of a company’s budget. This disconnect is impractical and risky, as suppliers provide mission-critical components and services. When suppliers stop, the company stops too. They also offer valuable insights into market trends and innovation. To better navigate future supply chain disruptions, CEOs must prioritize supplier relationships, particularly with top vendors. Building strong, personal connections with these key suppliers ensures a deeper understanding of external forces and strengthens business resilience.

Daniel Weise

Read the Original

This page is a summary of: Why CEOs need to make supplier strategy and procurement leadership imperatives, Planning Review, May 2022, Emerald,
DOI: 10.1108/sl-04-2022-0038.
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