No More Tiers - why manufacturing CPOs should introduce forward-looking supplier categorization
This white paper challenges the conventional approach of manufacturing Chief Procurement Officers (CPOs) in categorizing suppliers based on historical spend volume. It argues that the traditional tiering method is flawed, emphasizing spend over future business impact. The paper advocates for a forward-looking, multi-dimensional categorization answering key questions on resource allocation, future sourcing, and risk mitigation. It critiques the misalignment of spend-based tiering with strategic importance, urging CPOs to focus on performance-driven decisions.
The proposed categorization framework aims to foster co-innovation, targeted supplier management, and a separation of resilience planning from sourcing strategy. The integration of advanced supplier intelligence software is highlighted as essential for this paradigm shift, offering a more holistic and agile approach to supplier relationship management. In conclusion, the paper suggests that adapting to this new paradigm will give manufacturing CPOs a competitive advantage in shaping the future of procurement.