Purchased materials and services often make up 60 to 80 percent of a product’s cost. Companies that don’t invest in the purchasing team’s capabilities are throwing away value.
May 2013 | bySteffen Fuchs, Gillian Pais, and Jeff Shulman, www.mckinsey.com/
Jack Welch once notoriously said that “engineers who can’t add, operators who can’t run their equipment, and accountants who can’t foot numbers become purchasing professionals.” Hyperbole aside, General Electric’s legendary boss was reflecting a common perception: the purchasing function is little more than a necessary evil in business. No surprise, then, that many companies underinvest in the purchasing team’s capabilities and leave sourcing out of strategic decision-making processes in favor of functions, such as manufacturing and sales, that drive revenue.
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