Our nasty recession reminds us of a time-tested reality: through economic boom and bust, companies must continually look for ways to improve efficiency and enhance return on capital, and supply management is one way to do so. Done right, the payoff will be there. We've seen manufacturing companies move from an 8% return on invested capital to being 20% superstars; that's not fantasy.

So, why do many companies neglect a hidden lever -- supply management -- that can dramatically improve an enterprise's total performance? One reason, perhaps, is that numerous executives are stuck in a mindset that sees supply management as conventional "purchasing," there mostly to hassle suppliers into cutting prices.

But that leaves a lot of shareholder value unrealized and makes aligning companywide costs with revenue much more challenging. In its modern incarnation, world-class procurement and supply management offer the potential for enormous, holistic top-line and bottom-line benefit.

Successful companies -- as diverse as Proctor & Gamble, United Technologies and the 1990's Chrysler Corp. -- stand as proof.

They and other supply management-savvy companies pursue aggressive objectives that directly relate to improving total business performance, including:

Revenue Enhancements Through Collaboration

Here's a no-brainer: improving new product development can be a significant competitive advantage. But have you thought of asking your suppliers to help you speed up product launches at a lower delivered cost?

That may sound straightforward but a global consumer products company we counseled was surprised to learn that its raw materials suppliers saw them as only concerned about purchase price. The suppliers never thought that our client had any interest in collaborating. Once asked, many were eager to devote R&D skills. Our client came to see its supply management processes not as a tactic but as a strategic opportunity.

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