Analyst Insight: While traditional supply chain processes focus on efficient transactions, value chain networks are built on effective relationships. The difference is not trivial, challenging deep-seated traditional supply chain paradigms. With 70 percent to 80 percent of a product's components sourced externally vs. made in house, supplier relationship management is critical to value chain success.
Analyst Insight: The number one strategy for sourcing and procurement executives is taking costs out. But that requires an enterprise view of procurement and sourcing resources, including spend, business process, supplier contracts, organizational structure, and employees. Leading organizations have accelerated their strategic cost-reduction activities to ensure immediate sourcing and procurement ROI.
AMR Research expects shared services organizations and outsourcing delivery models to be a crucial vehicle for reducing sourcing and procurement overhead expenses. This will be enabled by a labor arbitrage, centralization of resources, tighter efficiencies in managed spend, improved process acumen and access to new technologies. These technologies, however, will see a shift from traditional license approaches to a more economical, integrated SaaS approach.