As has been stated by many commentators, a key economic success factor for New Zealand is the ability of our businesses both large and small to germinate, survive and thrive on home shores and overseas.
Businesses grow through having a solid customer value proposition supported by a strong focus on marketing and sales. These days there is also an often increasing reliance on external supply markets and networks. A global report on how well equipped organisations are to utilise the management of their supply base as innovators and enablers of business success (to obtain your free copy click here) suggests that New Zealand is not yet punching above its weight in this important value-adding business capability.
Over 10,000 persons involved in business procurement (external resource management) activities around the world have been assessed over a period of 10 years, across a range of competencies. The results identify key areas where New Zealand businesses could better focus and enjoy greater business benefits.
But what is business procurement really? ArcBlue, a global consulting group who specialise in aiding organisations towards taking a value-based approach to their business supply chains, suggests that it is the sustainable capability to think strategically about, and successfully influence those critical external relationships which can enable the organisation’s value-proposition, both now and in the future. This implies an organisational capability rather than just an organisation’s procurement function.
Richard May (FCIPS), the New Zealand Director of ArcBlue, with over 25 years-experience working with private and public sector organisations around the world sums it up with the phrase “the better we buy, the easier it is to sell (and/or serve)”.
The business supply chain above considers how internal resources (our employees) and external resources (our suppliers and their employees and their suppliers) can be better linked if one introduces value-chain thinking to every current and future action that is linked to a valued proposition being delivered to customers.
This article’s headline ‘the better we buy the easier it is to sell’ was coined by the very successful founder and CEO of Specsavers. His business supply chain approach is built around a strong value proposition, a sales focus that creates the revenue and a value-based procurement/supply chain focus that creates the margin and enables sales growth.
Value chain management in the professional procurement world is called Category Management. Richard May comments that Category Planning and Management is a cross-functional activity that accepts the need for resources external to the organisation and recognises that they will be an important component towards future success.
Successful category management requires leadership. As it is a cross-functional activity, this is not only procurement leadership but also senior management understanding and leadership. Through its interactions with many organisations, ArcBlue has identified a capability gap that is and will continue to hinder New Zealand business growth and success. Moreover, this ‘gap’ is not well appreciated by many senior managers across New Zealand. This evidenced by the general lack of investment in skills development by New Zealand organisations.
If you are unsure as to whether your own organisation has a ‘gap’ in category management capability, then there is an easy way to assess capability against a recognised global standard. Visit the following web-site (www.arcblue.co.nz) and complete the pQ online capability assessment page. This is available as a quick online individual capability assessment or as part of an enterprise level assessment and capability development plan the results will point to the gaps in capability that are hampering your efforts to create competitive advantage through value-chain management.
pQ online capability assessment is suitable whether your staff are part of the procurement team or are out in the business responsible for their own sourcing and managing of key suppliers.
Richard’s comment is to help New Zealand organisations punch above their weight in this important business-enabling area.
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