Profit from the Source: Transforming your business by putting Suppliers at the core

The central idea of the book – Profit from the Source: Transforming your business by putting Suppliers at the core, – “Businesses have to put suppliers at the core of their businesses and have empowered the procurement executives who are responsible for managing the collaboration with other companies”.

The book highlights that companies with procurement chiefs on leadership teams outperform the market by roughly 103%.

To quote from the book – “At individual level, CEOs should start spending about 25 percent of their time thinking about suppliers and participating in procurement activities”.

But the book notes that CEOs spend less than one percent of their time with suppliers.

“At an institutional level, CEOs should consider making suppliers – and by extension the procurement function – one of the top agenda items at board meetings on a regular basis.”

Why must procurement be the heart of the business?

Typically, the procurement function not only controls more than half of a company’s cost, it also determines the quality and sustainability of the company’s products and services.

If CEO’s use the potential of the procurement capability wisely, they can tap five mission critical sources of competitive advantage – Innovation, Quality, Sustainability, Speed, and Risk Reduction.

The book – “Profit from the Source” recommends three essential building blocks and a set of ten practical principles to get value from the supplier network.

The three building blocks

• What the CEO must do to change.
• What the company must do to change.
• What the company’s ecosystem – the network of suppliers – must do to change

Ten Principles

The First Principle: Start at the top. Make your suppliers and your procurement function leadership imperatives.

The Second Principle: Treat your suppliers as friends. Forge new dynamic relationships with your most important suppliers.

The Third Principle: Empower your “Shoppers”. Put your procurement team at the very heart of your product life cycle – from ideation to postproduction.

The Fourth Principle: Go Bionic. Create a procurement function that combines the virtues of human creativity and digital technology.

The Fifth Principle: Cut costs-fast. Demand up-front double savings from your top suppliers and double down the rest.

The Sixth Principle: Dream big together. Achieve breakthrough innovations by pooling R&D resources with your suppliers.

The Seventh Principle: Settle for perfection. Deliver unbeatable quality by joining forces with your suppliers to wage a war on errors.

The Eighth Principle: Share your tomorrows. Become truly sustainable by allying with your suppliers to meet environmental, social, and governance (ESG) standards.

The Ninth Principle: Get quicker, faster – as one. Go twice as fast by collaborating with – not competing against – your suppliers.

The Tenth Principle: Anticipate the inevitable. Halve the risks by working with your suppliers to predict the unexpected.

The three building blocks and the ten principles act as a blue print for how CEOs can extract extraordinary value from their suppliers by empowering CPOs (Chief Procurement Officers)to drive top-line growth.

The book is a must-read for CxOs in sectors heavily reliant on complex supply chains and supplier relationships.

The manufacturing industry is a prime candidate for applying the principles in “Profit from the Source.” Here’s why

Why it’s relevant

Complex supply chains: Manufacturing often involves intricate networks of suppliers providing raw materials, components, and sub-assemblies. Efficiently managing these relationships is crucial for production, cost control, and on-time delivery.

Intense competition: Many manufacturing sectors face intense global competition, requiring constant innovation and cost optimization to remain competitive.

Quality and reliability: Maintaining high product quality and ensuring reliable supply are paramount in manufacturing.

Sustainability concerns: Increasingly, manufacturers are under pressure to adopt sustainable practices throughout their supply chains.

In conclusion, Profit from the Source: Transforming Your Business by Putting Suppliers at the Core by Christian Schuh, Wolfgang Schnellbacher, Alenka Triplat, Daniel Weise makes a compelling case for elevating suppliers and procurement to strategic drivers of innovation, quality, sustainability, speed, and risk reduction.

By following the book’s principles, companies—especially in industries like manufacturing—can unlock significant value and gain a competitive edge. Suppliers are not just vendors but key partners in achieving business excellence. Empowering procurement leaders is a strategic imperative for long-term success.