Labour Cost Comparison For India And China

As  all major European and American companies are outsourcing manufacturing activities to these two countries  for the main advantage on low cost labour  making their product competitive in international market .

A report

Renowned as low cost destinations, manufacturing industries thronged China and India in the early 2000′s, sprouting factories on the back of low wages and cheap raw materials. However, optimism in the domestic market, inflation and a flood of foreign investments has led to a sharp rise in manufacturing salaries in both India and China. Total labor costs in India’s formal manufacturing sector have risen 20 percent this year and are expected to average US$2.68 per hour in 2010 compared to China’s US$2.51, a rise of 10 percent. Basic wages have risen fast in India over the last year, but still lag China, India averages US$1.71 per hour, to China’s US$1.82, according to a recently released report by IHS Global.
While Indian manufacturing costs are higher now, following the spate of strikes in factories in South China in June, over low salaries, the study expects total Chinese manufacturing labor costs exceed Indian salaries by 2013 and to be 20 percent higher than in India by 2020. Over the next ten years, wages in China are expected to rise steadily,  as compared to India where growth is more erratic. According to the study, China’s rising wages will not only reflect higher productivity, but also a step up in the value chain as a result of extensive investment in industrial infrastructure.
The difference in overall costs between both countries is however in benefits provided to employees. India’s benefit structure includes contributions to the Provident fund (social security), survivor insurance, pension contributions, state-mandated “13th month pay” and double pay for overtime. As basic wages rise, then benefits increase accordingly, which can add considerably to companies’ costs in India.
According to the IHS study, benefits make up roughly 36 percent of labour costs in India. The figures would be even higher if employers did not avoid many of these costs by employing contract workers.
In China, benefits make up just over 27 percent of labor costs. This figure is heavily diluted by rural workers, however, who earn only 8 percent benefits. Urban workers can earn up to 47 percent ad
ditional pay in benefits.
China’s manufacturing sector is more heavily dependent on exports to the West, which have suffered in the wake of the global recession. India’s economy, on the other hand, benefits from more diversity and domestic demand, allowing the rising wages to push total costs ahead of China.

source :
http://inchincloser.com

How effective are cost reduction strategies

most companies treat cost management as a one-off exercise driven by the need to manage short-term profit targets, while some of these exercises do succeed in the short term because of constant pressure from senior management, hasty cost-cutting typically goes into reverse once the pressure is removed and rarely leads to sustainable changes in costs. According to this McKinsey report, one-off cost cutting changes neither long-term process nor does it influence the way internal capabilities develop around opportunities.

A better approach is to focus on building competency in cost management rather than cost reduction. Cost management programmes tend to be more longer term but also, crucially, offer more flexibility in dealing with changing business conditions, for instance, by allowing faster response times demand level shifts and better influencing their competitive drivers.
 

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http://www.maltabusinessweekly.com.mt/news.asp?newsitemid=9835

Down Turn Brings Procurement In Front

Procurement divisions can do more to lead strategic initiatives that enhance value and reduce cost according to top management.
That’s the finding of Capgemini Consulting’s 2010 Global Chief Procurement Officer (CPO) Survey released today.
Almost 80 percent of professionals say top management expects them to improve the overall value contribution of the Procurement function.
Based on responses from over 150 global companies across Europe, Asia and the Americas, the survey reveals there is a clear and emerging focus on strategic initiatives that can enhance the value delivered by procurement.
These strategies include proactive value creation through innovation; contribution to corporate sustainability objectives; developing reciprocity agreements with suppliers; increasing speed to market and a focus on Total Cost of Ownership.
 
Cost reduction continues to be a major focus area with over 40 percent of respondents reporting savings targets at nearly 10 percent for 2010.
Strategies that Procurement executives are employing to achieve these targets include contract re-negotiation, tighter contract compliance, global sourcing, hedging and moving to outsourced procurement services.
There is a continued trend towards centralised procurement operating models with over 40 percent of the surveyed companies favouring this model and another 50 percent favouring a centre-led/hybrid model.

read more on
http://www.supplychainreview.com.au/news/articleid/70077.aspx

Manufacturing Challenges In India

he world today sees India’s economy growing into what’s expected  to be one of the biggest global economies by mid-century. Although India is still viewed by manufacturers as an economy where the risks are higher and the business environment more problematic than other rival Asian countries, India does offer some advantages for investors/manufacturers. Analysts say that the legal framework in India that protects investment is one of the best in Asia. The country also offers an abundance of  technical and managerial talent. The demand for electronics hardware is increasing at a rapid pace and is estimated to reach US$ 400 billion by 2020. At the same time, the gap between the demand and local manufacturing will widen and can reach US$ 300 billion, if the necessary measures are not taken on time. The major sectors driving the growth of local electronics manufacturing are telecom, consumer electronics, automobiles, defence, medical electronics, and the EMS industry, the last of which is expected to grow at a CAGR of 9 percent over the next five years.

License
The burden of licensing and involvement of the bureaucracy has significantly reduced in India, since 2000. In terms of the companies’ perception of the burden, India is rated better than China and Brazil on business regulation. Licensing is no more a requirement in India, after liberalisation. Only in few areas of manufacturing or services is licensing applicable, as in the case of 3G services, etc ------

Taxation
India’s commercial taxation system is unusually complex, especially where indirect taxes are concerned. While income tax, excise and customs duty are set by the Central Government, states and municipalities also levy their own taxes and provide discretionary exemptions to attract investment. Although the tax policy and many tax rates are set by the Centre, states and municipalities also levy their own taxes, which can overlap with state taxes. A manufacturer has no option but to take professional assistance to understand the tax structure.-------

Infrastructure
Weak infrastructure remains a significant cost factor for companies, although most infrastructure indicators are showing an improvement. For the efficient running of any industry, good infrastructure is of prime importance. Infrastructure helps in improving efficiency, quality, cost, and service. The basic infrastructure for any industry comprises good roads, power, water, telecommunications, finance, raw materials, components, and logistics. In India, availability of these facilities is not upto the mark even in established industrial estates.------


 Complete  story on
http://brandalyzer.wordpress.com/2010/10/03/manufacturing-challenges-in-india/

Indian Quality Revolution - A Report

In the last decade, Indian manufacturing companies have imbibed world-class practices in manufacturing management. They are today being rated among the best
At the end of the first decade of the 21st century, Indian manufacturing companies are at par with the best in the world from a quality perspective. The next step will be to gain scale.


India has the largest number of companies, outside of Japan, that have beenrecognised for excellence in quality. Twenty-one companies have received the Deming Excellence award and 153 companies have bagged the TPM Excellence award for their total productivity management practices from Japan Institute of Plant Maintenance (JIPM). As many as 165 companies have been recognised for the Confederation of Indian Industry (CII)-Exim Bank award for business excellence (equivalent to European Foundation for Quality Management awards); about 80 per cent of these are manufacturing companies. Sundaram-Clayton, Sundaram Brakes Linings, TVS Motors, Brakes India, Sona Koyo and Indo-Gulf Fertilisers are among the few Indian companies that have won both the Deming and TPM awards.
This has happened because in the last decade Indian manufacturing companies have imbibed world-class practices in manufacturing management by educating their employees, both managers and shop-floor staff with the help of global teachers who have brought in the best manufacturing management techniques. These practices have shown positive results in bringing down customer returns to below 50 parts per million (ppm), and have reduced manufacturing costs by 15-20 per cent over the decade.
Sundaram Clayton of the TVS group became the first company to get the Deming prize in 1998, after having put in 10 years of significant efforts to imbibe the total quality management (TQM) culture. The TVS group found a lot of commonalties between its culture and the one prescribed by TQM — and its companies became fully aligned to bring about “continuous improvement” into their fold. Many Deming Award winners are from the automotive and automobile component sectors, with Tata Steel being the most recent claimant in 2008. Tata Motors, among many others, is pursuing the Deming awards


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http://www.business-standard.com/common/news_article.php?leftnm=lmnu7&subLeft=7&autono=410025&tab=r

Cost Concepts - Tutorial

Cost concepts for any manufacturing unit explained  in  this video

5 Steps For Smarter Cost Cutting

Smartest  Cost  Cutting Strategies  As Advised by Steven Woods

With fast paced changes in a business environment  companies had to take fast decisions  with  little time for finer details to look for  any deviation  or error in selecting wrong strategies could lead to disaster for the  business

Here  are 5 basic steps for cost cutting

• Baseline

To know exactly where the business stands and what  are the best practices in that particular industry . Its like fact finding  and to know their  baseline

• Identify quick wins

Companies  should identify  the opportunities available  with  possibblities  of  savings  with minimum of investment and are sure of quick results.

• Quantify and communicate cost reductions

Any cost cutting needs to be quantified  No assumptions or vague figures .facts and figures needs to be figured out before planning for cost reduction strategies and  achievements  to be highlihted  to all

• Aligning cost reduction with business strategy

The larger business context needs to be considered in conjunction with any cost reduction exercise, because it is vital to understand how changes will impact utilisation and demand for IT resources

• Simplify operations

Building on the need to improve business efficiency, reducing the complexity of operations can help organisations to leverage savings without cutting service levels. Organisations often run excessive number of applications, data centres and the like, many of which may be outdate, unused or unneeded.










Read Article On
http://companies.mybroadband.co.za/blog/2010/05/10/five-steps-to-smarter-cost-cutting/

Ford Increases Its Local Supplier Base In India

Automotive companies continue to push efforts to localize their supply bases when serving global markets, often at a rate that appears significantly higher than other industries. This makes sense for a number of reasons, starting with the ability to create a natural hedge in buying materials and selling goods in the same currency. But the real reason for buying locally often comes down to a combination of the cost advantage of local suppliers, government incentives (or requirements) to source locally due to offset requirements and the added expense of importing supplies from an inherently longer supply chain. In India, Ford is one of the companies leading the local sourcing charge.

According to the above-linked article, "Ford India's commitment to launch a new product in the country every 12-18 months will see the company strengthening its domestic supplier base ... The carmaker's latest offering, Ford Figo, is a case in point. With an eye on capturing the thriving small car market, the product has been competitively priced with about 85 per cent of its components procured from domestic suppliers."

Read more on

Source : http://www.spendmatters.com/index.cfm/2010/4/6/Ford-goes-Local-in-India
Author: Jason  Busch

IT Adoption Helps Indian Manufacturing Industry In Operational Efficiencies

Manufacturing organisations have multiple functional needs and technologies can be broadly mapped under horizontal and vertical dimensions. Business IT enablers such as ERP (enterprise resource planning) systems have reached a higher level of adoption as general business IT tools of the manufacturing.



The prevalent technologies vary across functions in the organisations. At the shop floor level, CNC (computer numerically controlled), PLC (programmable logic controls), and HMI (human machine interface) provide the industrial automation technologies that serve in the automated control of the physical manufacturing.



More advanced users have matured into centralised plant operations control with SCADA technologies. In terms of product design and manufacturing process design, 3D design, PLM (product lifecycle management), and digital manufacturing are evolving in adoption cycle from the nascent stage of 2D design platform.



Very advanced users, though a few, have evolved to use complete plant modelling and simulation, with virtual commissioning and advanced tools such as process simulate, factory flow, factory CAD and so on. Here, practically before a single rupee is invested in physical plant infrastructure, the entire model and operations can be visualised on different what-if business scenarios.



In the horizontal functions, ERP (enterprise resource planning) has a mature adoption curve, while SCM (supply chain management) systems are in mid stage of maturity in adoption. Very progressive companies have looked at vertical application integrations, between the shop floor and business systems, to provide competitive advantage and have adopted manufacturing execution systems (MES) and manufacturing intelligence solutions.



Read more on http://beta.thehindu.com/business/article397976.ece

Bajaj Auto Cut Cost Through Outsourcing

Cutting costs by radically changing manufacturing processes over half a decade—initially at its factory in Chakan, near Pune, and later at other facilities—was the reason the country’s second largest maker of motorcycles remained in the black despite the sales plunge.


The feat involved the way the auto maker, known primarily for its ubiquitous scooters, designed and produced motorcycles. It decided to massively outsource the manufacture of parts to a core group of suppliers, thus cutting down heavily on variable costs.



Kevin D’sa, vice-president of finance at Bajaj, credits the company’s ability to defend profit margins to this move. At present, 72% of the firm’s costs to sales are variable, while fixed costs are at 6%, he said. The remaining 22% is reflected as revenue minus cost of sales and operating expenses.



“This protects the company in the event of a slowdown or downturn and resultant volume contraction,” D’sa said.


The move also improved manpower productivity by five times since 2002, and reduced Bajaj’s suppliers from 800 to 185. Today, just 15 vendors supply 75% of the components used at its Pantnagar facility in Uttarakhand. At Chakan, 50 suppliers cater to 100% of its requirements.

Read more on

http://www.livemint.com/2010/04/13001557/Bajaj-Auto-gains-from-outsourc.html

Wire Less Control Communication Reduces Installation And Maintenance Cost in EOT Cranes

Wireless control communication reduces installation and maintenance costs in overhead crane operations



Overhead cranes are used around the world for moving cargo containers, crates and other materials to different locations in warehouses, train yards, and shipping ports. Controlling the speed and direction of the cranes is of utmost importance to prevent collisions and damage to either the cranes or the materials being moved.


The operator is stationed either in a booth mounted on the crane or on the ground with a remote control pendant. In either location, accurate feedback from the crane is essential to determine its position and speed.


This feedback is typically provided by sensors mounted on the crane to detect the distance and position relative to a reference point. Alternatively, an encoder may be used to count pulses. The outputs of the sensors or encoders are transmitted to displays or programmable logic controllers (PLC) through cables or wires.


Cable Stress Increases Maintenance Cost and Failure Risk


As the crane moves throughout the work area, these cables are continuously flexed and bent, creating a critical maintenance issue. Many overhead cranes use flexible conduit or tracks to reduce the stress of the flexing on the cables. Some use loops in the cables and wires to minimize movement during the flexing. But even with these solutions, the cables and wires are at risk of failure and eventually need to be replaced.



Wireless Communication Eliminates Long Cable Runs


Wireless I/O devices, like the SureCross DX70 and DX80 from Banner Engineering Corp., are being used increasingly in both new crane designs and retrofit installations. Eliminating the cables and wires decreases both the cost of installation of the sensors and encoders and the cost of maintenance on the overhead cranes.

In one of the many applications of wireless control, a manufacturer of sheet metal rolls and metal plates uses an overhead crane controlled from the floor of the warehouse. The location of the crane is monitored by using 2 retro-reflective laser sensors. One sensor measures the (X) location along the length of the warehouse, and the second measures the (Y) location of the crane along the width.



The two sensors provide analog outputs connected to numeric LED displays that indicate the crane position in both the X and Y axes of movement. The operator of the crane reads the information from the displays to correctly position the overhead crane to pick up and place the metal rolls or plates in the proper locations.


The retro-reflective laser sensors each give a 4-20 mA analog output, which is connected to an analog input on the wireless I/O device. The wireless device checks the analog output of the sensors as many as 8 times per second to monitor the position of the overhead crane. Since the wireless device and both sensors are mounted on the moving crane, very short runs of cable are needed to connect them and they do not bend or flex.



The wireless device transmits the analog output information to a second wireless I/O device that is installed next to the digital displays. This device has 2 analogue outputs that are connected to the digital display inputs, one showing the X location of the overhead crane, and the second showing the Y location. Based on the digital readouts, the operator uses the remote control pendant to move the crane to the correct location.


Compatible with Many I/O and Control Devices


In addition to discrete and analog I/O, industrial wireless networks also allow communication via RS485 and RS232 serial communication, and Ethernet TCP/IP communication. This allows the wireless networks to interface with many different types of I/O devices, as well as PLCs and computers.



Signal integrity is important in all wireless networks. Some concerns when using wireless signals are that objects might block the signal or that other radio sources in the area could interfere. These are valid concerns and are accounted for with the design of modern wireless I/O networks.



The use of frequency hopping spread spectrum and time division multiple access protocols prevent much of the interference from other radio sources and objects. Some wireless I/O networks also include a communication or link loss indication and an output default condition that prevents crane operation if the signal is lost. These features result in robust, reliable wireless communications.

The use of the wireless I/O devices saves money in three ways:

◦During control system installation there is no need for long runs of cable.

◦Maintenance costs and system downtime are reduced because there is virtually no risk of broken cables.

◦Reliable location information transmitted by the wireless devices reduces the risk of collisions. This reduces costs for replacing damaged materials or parts of the overhead crane.
 
Author :Lee Kielblock
Source : http://www.ipfonline.com/
 
Manufacturers :  Banner Engineering India Pvt Ltd, Pune 411 016. Tel: 020-66405624. Fax: 91-20-66405623. Email: sales india@ bannerengineering.com)

Indian manufacturing could be a low cost base to global companies

There isn’t an Indian way of doing things, although the country’s manufacturers have shown that they can make small batches of products in a


cost competitive manner. This only proves India’s competitive strength lies in ‘frugal engineering’, a phrase coined by Franco-Japanese automaker chief, Carlos Ghosn.



Since Indian manufacturing lacks the scale that China has, it needs to evolve its own model, Satish Sekhri, managing director, Bosch Chassis Systems, said.



He was emphatic that Indian industry should evolve a unique method, which takes into account our social fabric, sensibilities and competencies. Indian manufacture is able to make small batches with a large variety.


Read more on
http://economictimes.indiatimes.com/news/news-by-industry/auto/automobiles/Low-cost-lends-edge-to-Indian-manufacturing/articleshow/5655931.cms
 
 
 

Re -Usable Insulating Material - Industrial Product review

Routine system maintenance on industrial processes often involves removing insulation on pipe valves and fittings. If it is not replaced, the energy loss can be substantial. Removable/reusable insulation blankets, pads and covers used in areas that need occasional access provide a workable, efficient solution. The US Department of Energy long ago documented that industries using steam in their processes [i.e., glass, paper, steel, aluminium] could save up to 5 per cent of their energy costs by simply installing removable/reusable insulation on the flanges and valves of their steam systems.
 Hi-Tech International offers removable/reusable insulation jackets that allow a cost-effective approach to insulating systems, where insulation is desired but occasional maintenance or inspection is required. Items such as valves, pumps, tanks, turbines, instrumentation, heat exchangers, blowers and fans all utilise this product for either thermal or acoustical reasons. Multi-layer energy saving insulation covers provide protection from fire, oil spillage and results in energy saving. These are 100% incombustible and undergo strict tests as per BS476 Part 20. The inner insulation layers are made from alumina silica fibres to reduce the heat loss from the valves and joints to keep the system heat constant and prevent heat loss. Products and applications: removable valve covers; thermal insulation over pipes and joints; covers for steam pressure valves; and turbo charger insulation. All materials are tested as per British Standards BS 476- Part 20.

Source :Iponline.com

Energy savings in air compressors

Energy savings in Motors

Energy savings for Motors

Energy savings in Industrial Lighting for factories

Energy savings in Industrial lighting

Packaging cost reduction strategies

Packaging cost is a significant factor in costing of product .Packaging plays an important role in an manufacturing industry . Packaging basic roles are . Different packaging materials are used in manufacturing industry for various products such as Glass , Wrapper s, laminates , carton boxes , hdpe , bopp , polythene , theromocol ,bottles , cans , bags ., papers etc .Packaging is an integral part of the materials supply chain. It protects goods from damage, allows efficient distribution, informs the consumer and helps to promote goods in a competitive market place



Providing protection from mechanical damage
Increasing shelf life of product
Easy handling of items during transportation
Advertisement and messages from manufacturers
Legal declarations on packs for consumers


Manufacturers are employing various strategies and ideas to reduce packaging cost of the product .Packaging are strong medium of marketing various design and concepts are used to differentiate ones product from competitors

Following steps can results in savings

Change dimensions of the primary /secondary packaging as per the product
Change the product dimensions as per the secondary packaging which would result in better handling and optimum use during stacking and loading an container
Thickness of the material used in packaging can be reduced with trials such as material are safe during transit
Preformed boxes /cartons can be used rather than employing labor to do in-house
Universal boxes and packaging material can be used for the product basically for multilocational companies
Alternate materials can be used
Excessive packaging to be avoided
Use pre printed boxes/ wrappers can save cost on printing
Automation on packing machines can also help reducing packaging cost


for more on packaging reduction log on to http://shumaonline.com/costreduction_packaging.html

Seven Wastes to be eliminated for lean Production

Here are seven wastes which if eliminated can result in lean production and better productivity

1.Over-production
2.Waiting
3.Transporting
4.Inappropriate Processing
5.Unnecessary Inventory
6.Unnecessary/Excess Motion
7.Defects

Watch this Video

Supply chain management -short video

India to be next Major Automobile Manufacturing hub

The 2008 version of auto expo in New Delhi, which saw unveiling of world's cheapest car Nano by Tata Motors, catapulted India's image from just being an auto market to emerging auto-manufacturing giant. This faith of global players in the Indian auto market was further confirmed at the just concluded biennial mega event in New Delhi which saw Japanese auto majors Toyota and Honda unveiling their global strategic models, both compact cars, especially designed and developed for the Indian market.




And this was not all. Be it the mass market players like Maruti Suzuki, Hyundai and Tata Motors or those keen on tapping the fast-growing luxury segment like Skoda, BMW, Mercedes-Benz, Audi or Volkswagen - all were there at the mega show announcing India launch of their latest models and unveiling their concepts.


One automaker that presented itself as a 'complete brand' was General Motors, which is not only making efforts to tap the maximum selling compact segment but is also looking at the luxury segment.


Through the highly competitive pricing of its new compact car 'Beat', it could have triggered a price war in the mass selling segment.



The growing clout of Indian automakers was clearly underlined by a recent survey by leading consultancy firm KPMG, which said that global automotive market share winners over the next five years would include various new Chinese and Indian vehicle manufacturers, along with leaders like Hyundai/Kia, Toyota, Honda and Volkswagen.


From the current ranking of 11th largest passenger car market, India will jump to the seventh spot in the next five years. And it is not just about cars; India is also world's second largest two-wheeler market and fourth largest commercial vehicle market, besides emerging as a quality component manufacturing base with low-cost advantage. So, auto experts were not at all surprised with Honda's decision to export crucial components from its new plant in Rajasthan to its headquarters in Japan, while Hyundai and Suzuki Motors have already made India as their export hubs.


Concept vehicles
For the record, the week-long show, jointly organised by the Automotive Component Manufacturers Association (ACMA), the Society of Indian Automobile Manufacturers (SIAM) and the Confederation of Indian Industry (CII) since 1986, saw participation of over 2,100 exhibitors and launch of 25 new models (the biggest ever so far), besides unveiling of over two-dozen concept vehicles. It was a huge hit as far as footfalls were concerned as almost 20-lakh auto-enthusiasts, apart from those eyeing serious business opportunities, witnessed the extravaganza.



The auto show also helped companies gauge the mood of their Indian customers and accordingly plan their future launches in the booming market that recorded growth despite economic slowdown even as the markets in the U.S. and Europe fared badly.



One segment that has caught everybody's attention is the scope of battery-operated cars. It was precisely for this reason that some major carmakers like General Motors, Renault, Hyundai, Tata Motors and Maruti Suzuki announced their plans to bring "green cars" in the near future. India is also being seen as a major source of e-cars for global markets.



On the other hand, the commercial vehicle segment saw global players like Volvo, Navistar, Tata Motors, Ashok Leyland and Mercedes-Benz renewing their focus on the Indian market, thanks to the boom in the infrastructure sector and consistent economic growth.


India is also poised to emerge as a major destination for hi-end biking, besides consolidating its position as mass bike market and its major exporter.


The entry of iconic Harley Davidson brand and Ducati bikes in India are examples of it, while other players like Ducati, Yamaha, Suzuki and Honda are bullish on the idea.



Similarly, the presence of component manufacturers in huge numbers, which included dedicated stalls from countries like China, Germany and Italy did not surprise Indian industry.



Besides seeing huge domestic potential, emergence of India as a manufacturing hub for exports has prompted them to make a beeline for the sub-continent. Interestingly, the domestic auto component industry is targeting a six-fold growth in exports by 2016.


Pointing out that component sourcing by both domestic and global auto majors turned out to be a major activity at this year's show, ACMA President Jayant Davar said, "India's advantage as an ideal cost-competitive hub is the key, and this is going to prop up component exports in a big way in the years to come." From around $20 billion in 2009, 20 per cent of which would be exports, Indian auto component industry is likely to touch $45 billion, of which 50 per cent would be from exports.

Author : Sandeep Joshi
Source : The Hindu

Purchasing trends for last ten years

Top 10 Purchasing Changes In 10 Years


By Charles Dominick, SPSM



How Are Purchasing & Sourcing Different Today?

The new year's arrival made me ponder how purchasing in 2008 differs from purchasing in 1998. Here are the top 10 purchasing changes in those 10 years.



10. Technology Proliferated. Today, eProcurement and eSourcing are two of the most useful practices in purchasing. Ten years ago, those terms were unheard of.



9. Center-Led Procurement Arrived. In 1998, even top purchasing departments processed purchase orders. Today, purchasing departments aim to centralize the supplier selection process, not transactions, which are delegated to end users or outsourced.



8. Purchasing Grabbed More Spend. When purchasing departments deliver results, management seeks more spend that Purchasing can positively impact. Once sourced by other departments, categories like fleet management, benefits, and travel services are now sourced by Purchasing.



7. Social Responsibility Became A Top Priority. Whether for philanthropy or to avoid media scandals, management counts on Purchasing more than ever to buy from diverse suppliers, make environmentally-conscious decisions, and do business ethically.



6. Measurement Was Mandated. With the potential of smart purchasing widely known, senior management more strictly holds their purchasing departments accountable for results. The use of purchasing metrics and dashboards is now commonplace.



5. Strategic Sourcing Went DIY. In the '90's, strategic sourcing was done mostly by consulting firms hired to help companies reduce spend. Today, many companies have their own refined and documented in-house strategic sourcing processes.



4. Supplier Roles Expanded. In 1998, there was talk about "partnering" with suppliers. Today, there's action. Top purchasing departments actively develop their suppliers and look to the supply base for ideas, better performance, and innovation.



3. Global Sourcing Went Mainstream. Ten years ago, only the progressive companies were searching abroad for suppliers. Now, in some countries, it is difficult to find products manufactured domestically.



2. The CPO Position Got Adopted. This past year alone, I've encountered an unprecedented number of folks with the title "Chief Procurement Officer."



1. The Supply Chain Was Recognized. In the last decade, companies more closely analyzed the way material flows into, through, and out of the organization. This "supply chain" focus has those who once just placed orders now responsible for inventory, warehousing, outbound logistics, and distribution.

Source : Nextlevelpurchasing.com