Executive Briefings

Collaboration Between Procurement, Logistics Not Practiced at Many Companies, Study Shows

While there has been much talk over the past 10 years or so about "collaboration," much of it has been focused on external supply chain collaboration. It seems that many companies neglected to get their own houses in order before looking outside their own supply chains, according to a University of Tennessee report entitled Bending the Chain: The Surprising Challenge of Integrating Purchasing and Logistics.

Collaboration Between Procurement, Logistics Not Practiced at Many Companies, Study Shows

The report states that "organizations that closely integrate their purchasing and logistics functions deliver better business results… [but] many firms fail to capitalize on this opportunity and have supply chains where purchasing and logistics operate in 'silos' with little cohesion."

Even though 50 percent to 70 percent of an organization’s costs come from logistics and purchasing (and have a major impact on up to 80 percent of its working capital through inventory and accounts payable), logistics and purchasing often won't collaborate with each other.

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The report states that "organizations that closely integrate their purchasing and logistics functions deliver better business results… [but] many firms fail to capitalize on this opportunity and have supply chains where purchasing and logistics operate in 'silos' with little cohesion."

Even though 50 percent to 70 percent of an organization’s costs come from logistics and purchasing (and have a major impact on up to 80 percent of its working capital through inventory and accounts payable), logistics and purchasing often won't collaborate with each other.

Read Full Article

Collaboration Between Procurement, Logistics Not Practiced at Many Companies, Study Shows