For the last 100 years, almost all business strategies and processes have undergone a fundamental change. These changes have improved company financial results by increasing the company competitiveness. It is a conundrum, then, that the purchasing function remains essentially unchanged since – also 100 years ago – when Henry Ford opened his Rouge River, Michigan, plant to produce the Model T, launching a new industrial age in this country. In essence, the purchasing function has remained in a time-warped tactical silo, while most other business practices have evolved strategically and delivered step-function positive financial impacts. This is mostly because executives regard purchasing as only having the potential to positively impact financial results through reducing the price paid for purchased material. It’s time for a change. It’s time for a whole new purchasing paradigm.
Hear Ryan Kelly, general manager – San Francisco Tech Lab, AMT – The Association for Manufacturing Technology, and Paul Ericksen, former chief procurement officer, Industry Week’s Supply Chain Initiatives, discuss several ways in which a fundamental change in purchasing practice can dramatically improve company financial performance above and beyond what can be achieved through a sole focus on lower material cost.