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Nearly three-quarters of CEOs and division presidents report that their supply management organizations still rely heavily on block-and-tackle practices such as short-term decision making, cost reduction at the expense of total cost of ownership, and failing to revisit make-versus-buy decisions after they’ve been made. Given this statistic, no wonder the two groups don’t see eye to eye.
The core issue is about capability, not understanding. Only a minority of supply management organizations are collaborative, agile and proactive (although most have mastered at least one of these capabilities). While the supply management organization is uniquely positioned to help the company improve all four drivers of return on invested capital — revenue, costs, working capital, and capital expenditures — few are living up to this ambition.
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