Your Business News

Strategic procurement can help combat market uncertainty and control costs

July 10, 2023

Authored by RSM Canada LLP

Edwin P. Reilly, CPA, CA shared this article

ARTICLE | July 10, 2023

Ongoing challenges in middle market supply chains have highlighted the downside to years of global sourcing and single sourcing.

Many manufacturers and distributors find themselves being held hostage to a supply base that behaves much differently than it did just a few years ago. Issues include unpredictable availability, continued cost increases and highly erratic lead times. In addition, inventory levels have drastically increased in the last several months as a combination of decisions around increasing buffer stock have combined with compressed demand.

Improving procurement capabilities should therefore be front and center. Organizations should de-risk their supply chains with improved supplier optionality, optimized inventory levels and perhaps most importantly, stronger strategic supplier relationships that enable flexibility and cost control.

Diversifying suppliers

Going forward, supplier optionality is one of the primary means of improving resilience, reducing risk and improving value. While not always possible, developing multiple suppliers for the same item spreads out risk, creates a competitive environment, often develops a second set of next-level suppliers and allows for smoother capacity adjustments. We see many companies single source almost everything, leaving their supply chain inflexible and subject to spikes in demand and supply. 

Excess inventory

Another very common action companies took in response to recent erratic supply is increasing inventory. A recent Forbes study showed that global manufacturing inventory grew by 30 days from 2004 to 2022. Even with the latest ERP systems in place, CEOs clearly sought to reduce risk by putting inventory on the floor as a form of safety stock. Now facing higher inflation and shrinking demand, companies are unable to react effectively as warehouses are full of the wrong finished goods.

Frustrated chief financial officers are reacting by elongating payables to improve the cash-to-cash cycle, often sending unilateral demand letters to suppliers instead of leveraging payment terms as a negotiating point in the larger value equation of total delivered cost. The result is often damaged relationships and a weakened ability to execute strategic sourcing, thereby creating an even more inflexible and higher-cost supply chain.

An effective procurement approach

Improving supply chain resilience through supplier optionality, lower inventory and better value can all be addressed with a proven approach to strategic sourcing and better supply chain planning. RSM uses a unique five-step strategic procurement process, containing several critical components that enable our clients to perform more effectively beginning with a complete spend analysis and procurement maturity assessment. 

RSM's unique five-step strategic procurement process

RSM's unique five-step strategic procurement process

Performed properly and in the right sequence, the five steps and their components consistently deliver better value (often from incumbent suppliers) and improve supplier optionality. Combining the five-step strategic procurement process with a sales and operations planning process focused on scenario planning and predictive analytics results in a more flexible, higher value and resilient supply chain capable of flexing inventory in response to changes in demand and supply. 

Learn more about how our supply chain services team can improve your company’s value and supply chain resilience.

Let's Talk!

Call us at 1 855 363 3526 or fill out the form below and we'll contact you to discuss your specific situation.

  • Topic Name:
  • Should be Empty:

This article was written by Casey Chapman and originally appeared on 2023-07-10 RSM Canada, and is available online at

RSM Canada Alliance provides its members with access to resources of RSM Canada Operations ULC, RSM Canada LLP and certain of their affiliates (“RSM Canada”). RSM Canada Alliance member firms are separate and independent businesses and legal entities that are responsible for their own acts and omissions, and each are separate and independent from RSM Canada. RSM Canada LLP is the Canadian member firm of RSM International, a global network of independent audit, tax and consulting firms. Members of RSM Canada Alliance have access to RSM International resources through RSM Canada but are not member firms of RSM International. Visit for more information regarding RSM Canada and RSM International. The RSM trademark is used under license by RSM Canada. RSM Canada Alliance products and services are proprietary to RSM Canada.

FCR a proud member of RSM Canada Alliance, a premier affiliation of independent accounting and consulting firms across North America. RSM Canada Alliance provides our firm with access to resources of RSM, the leading provider of audit, tax and consulting services focused on the middle market. RSM Canada LLP is a licensed CPA firm and the Canadian member of RSM International, a global network of independent audit, tax and consulting firms with more than 43,000 people in over 120 countries.

Our membership in RSM Canada Alliance has elevated our capabilities in the marketplace, helping to differentiate our firm from the competition while allowing us to maintain our independence and entrepreneurial culture. We have access to a valuable peer network of like-sized firms as well as a broad range of tools, expertise, and technical resources.

For more information on how FCR can assist you, please call us at 1 855 363 3526

Important Notice:

FCR will now redirect you to CCH Portal where your FCR Client Portal login is located.

Share This