Procurement in the Supply Chain: It’s Goldilocks and the Three Bears All Over Again

by | May 20, 2015

“The first bowl of porridge was too hot. The second bowl of porridge was too cold. But the third bowl of porridge was just right…”
The tale Goldilocks and the Three Bears is well known to most of us from childhood. But what can it tell us about procurement in supply chain management?
According to Christopher Craighead, Rothkopf Professor and Associate Professor of Supply Chain Management at Penn State’s Smeal College of Business, procurement can yield a long-term competitive advantage when managed “just right.” Procurement is all about balance—not too much in one area and not too little in another. When procurement has trouble finding this “just right” amount for each situation, it has negative consequences for supply chain stability, trade compliance, company financials, and internal business engagement. Procurement organizations need to challenge stakeholders and the supply base sufficiently and not simply redistribute cost and risk.
In a recent article in Supply Chain Management Review—co-authored with David Fields, a principal at Ernst & Young, and David Ketchen, a management professor at Auburn University’s Harbert College of Business—Craighead proposes the “Goldilocks Procurement Strategy” (GPS). The strategy focuses on balancing five competitive levers of procurement:

  • category management and strategic sourcing
  • procure to pay
  • demand management
  • supplier relationships management
  • contract management

Although executives may be tempted to exploit procurement’s competitive “levers” to the fullest, they need to know how much to push these levers as well as when to back off, says Craighead. By mastering this technique, companies can enhance their competitiveness and lower their supply-side risks.

<span style="color: #8A93A8;font-size: 12px;margin:0;padding:0;line-height: 1">Written By:</span><br>CorpU

Written By:

We grow leaders, who grow companies, which make a difference.

Read More

Designing Great Digital Programs

Designing Great Digital Programs

Blending the Art of Teaching and the Science of Learning Designing digital programs is a skill but often based only on our experiences, which makes it feel more like an “art”. That may not be enough to create great programs. The objective of this webinar is to share...

read more
Learn the Secrets of Growth Leaders – Webinar

Learn the Secrets of Growth Leaders – Webinar

Organic growth of top line revenue and bottom line profitability is a high priority for all companies. Yet, few companies are growing at their fullest potential or capturing the opportunities created by the fallout from the pandemic.

read more

Begin Your Company's Learning Journey Today

Get in Touch