Can sourcing be a ‘source’ of competitive advantage in the food industry?

Can sourcing be a ‘source’ of competitive advantage in the food industry?

by Dr Atanu Chaudhuri

Many traditional supply chain managers view sourcing as merely a cost driver and fail to see how it creates business value and competitive advantage. But the reality is procurement strategy and sourcing solutions are directly tied to business performance and is particularly true for food industry. Without the ability to develop a sourcing strategy and select, manage and evaluate suppliers, a company loses its ability to ensure freshness, quality and consistency of raw materials and ingredients which can significantly impact revenues and profitability.

The global supply chain, volatile commodity prices and ensuring social, environmental and economic sustainability across the supply chain add further complexity and make the job of a supply chain manager in the food industry extremely challenging!

Thus, supply chain managers and sourcing specialists in food companies need a systematic approach to achieve sourcing excellence which should include

  • Classifying sourced items and developing tailored sourcing strategies
  • Creating an efficient and responsive sourcing and procurement organization
  • Analyzing souring uncertainties and developing coping strategies for those
  • Developing and implementing analytical approach for supplier selection and supplier performance management
  • Implementing sustainable sourcing practices beyond compliance requirements
  • Developing suitable approaches for managing risks of commodity price volatility
  • Continuous spend management

Leading companies like Unilever, Kellogs and Nestle have been going through journeys for achieving sourcing excellence.

Though there are important lessons to be learnt from those initiatives, each food company has to develop their own processes and practices suited to their own business needs.

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