The purchase ledger records commercial value. Operational analysis reveals what the business actually depends upon. This distinction, drawn from Navigating Supply Chain Challenges by Dr. Uppiliappan Gopalan, overturns a common assumption in procurement.
When Spend and Criticality Point in Opposite Directions
A high spend category may have several qualified alternatives readily available. A small electronic controller costing only a few pounds, by contrast, can prevent completion of a finished product worth thousands, because it sits inside a design that requires testing, tooling or regulatory approval before any substitution is possible.
The Real Question to Ask About Every Input
Can production continue when the item becomes unavailable? How many products and sites depend upon it? Dr. Gopalan argues that the importance of an input is determined by what stops when it becomes unavailable, not by its price tag on an invoice.
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