19 October 2006

Chief procurement officers need to understand the differences between contract manufacturing and other types of supplier relationship if they are to lead this growing area of outsourcing.

Brian Slobodow, CPO of Johnson & Johnson Consumer Products, told a US conference of purchasing executives in Scottsdale, Arizona, that there were some "unique characteristics" of what he called "contract operations" - outsourced manufacturing and packaging.

And he urged procurement leaders to "get in the game" or risk these critical supplier relationships being managed by other functions.

Contract operations (CO) will increase in usage over the next few years, he predicted. "CO will stretch today's CPO to be a broader leader," he said.

Slobodow said COs differed from other kinds of strategic sourcing in many important ways. Chief among these was that products were typically shipped straight from a contract manufacturer or packager to customers.

SMoct2006