Earlier this week, we summarized a provocative article from P. Fraser Johnson and Michiel R. Leenders, of the University of West Ontario and the Richard Ivey School of Business, respectively, that recently appeared in MIT's Sloan Managment Review. Subkect: the challenges of accurately accounting for the value of supply management and procurement effectiveness. (See The Challenge in Quantifying Savings from Supply Management.)

The chart below was taken from that article, and list the practices that lead to both under and over-estimating the savings from supply management initiatives - as well as the consequence of those practices.

Johnson and Leenders do a nice job in the article, but this is a very difficult topic that may in the end never really be solvable to everyone's satisfaction.

Agree or disagree? What is your perspective? Let us know your thoughts at the Feedback button below.