A letter to the CFO/CIO on Direct Material Spend - 1Business | February 15, 2023 | By
To the CFO/CIO,
The direct material spend adds up to 65~70% of the total revenue.
While the ERPs help to release the POs as per the production plan and based on existing contracts, how do you create the contracts?
- Do you have visibility into the quotation process and the efficiency of the negotiation process?
- How about the traceability and documentation of the decision-making/supplier selection process?
- Does this existing ERP system have the capability to gather and display the supplier communication/interaction?
- Do the existing systems have the capability to document the quality requirements and the supplier quality approval process?
- What is the existing process to capture the impact of commodity prices; visibility and control in terms of the supplier contract changes to keep up with the commodity index?
While some systems have the capability to capture the decisions/status along the way, almost all existing ERP installations in the product manufacturing companies do not have the capabilities mentioned.
For this reason, companies need a more detailed sourcing and procurement management system. And particularly a system that is specialized to handle the complexities in the Direct Material.
As a pioneer in the Direct Material Source-to-Pay, Zumen is miles ahead of the solutions available in the market. We invite you for an opportunity to discuss the Direct Material Process in Product Manufacturing Space and what is at stake here.