Short week, short article:

How many procurement departments treat their suppliers like assets? While I believe that many procurement groups act like they “own” their suppliers, based upon the terms of the executed contract and the supplier’s desire to generate income from the relationship; “owning” suppliers in this sense is more like being the “boss” and always getting your way, not in the sense of operating with an owner/investor mindset.

Collins English Dictionary defines an asset as “a thing or person that is valuable or useful.” That is the right definition for this ROA series. In an ideal situation, that description should be applied to almost all of an enterprise’s suppliers – valuable and useful; why else are you working with them?

(Sidebar: I hope you consider CPO Rising to be an asset and that you will take an owner/investor mindset and consider making a small investment in it – like making a comment, forwarding an article to a colleague, or agreeing to an interview – to make it more valuable.)

If an entire organization were to begin treating its suppliers like actual assets to the business, what would change? If a supplier is suddenly viewed as an asset, something that is worth investing in and something that can grow in value over time, shouldn’t the approach in managing that supplier change?

If you do believe that innovation can occur beyond the walls of your enterprise, suppliers should be viewed as a source of knowledge and expertise that can be leveraged to competitive advantage and mutual gain. That sounds like an asset to me.

Yes, Virginia, there is a Santa Claus suppliers are assets.

Invest wisely in the right suppliers and you may see many happy returns.

Tagged in: Return on Assets, Strategy, Supplier Relationship Management, Suppliers