Forget everything you know about strategic sourcing

An early look at Ardent Partners’ CPO Rising 2018: The Age of Intelligence report revealed that, for the first time this year, sourcing has fallen out of the top 10 strategies employed by leading Chief Procurement Officers (CPOs).

Kelly Barner, Managing Director of Buyers Meeting Point, an online resource for procurement and purchasing professionals, discusses how we can rediscover strategic sourcing’s potential for value-driven spend management.

Strategic sourcing had better hope that the saying about there being no such thing as bad publicity is true, because very little of the attention that it has gotten recently has been good.

And yet, blaming strategic sourcing for falling out of alignment with procurement’s priorities is like blaming your car for that last fender bender that you had. Circumstances notwithstanding, as the driver you have to look in the mirror and contemplate your role in the incident.

The biggest problem with strategic sourcing is that it isn’t strategic anymore. We have gotten so used to following the process of sourcing from memory that we are not actively engaging with it. If we are going to pull sourcing back from the edge, we need to look at it with fresh eyes, rediscovering its potential for value-driven spend management.

Since we have already established that procurement has looked over the strategic sourcing process a few (hundred) times too many to be objective about it, whose eyes can we borrow to see it again for the first time?

I could suggest that you solicit feedback from supplier partners, but they have too much skin in the game to be as objective and constructive about sourcing as procurement requires. A much better option would be to speak to your own company’s sales team. How does your current process put them at a disadvantage or force them to put their ‘A-Game’ on display? If they were to assign priority to the steps, or allocate a percentage of procurement’s time and effort to each stage of the process, where would they put emphasis and why?

The amazing thing about interns is that they combine all of the enthusiasm of bright new minds at the outset of promising careers with a complete absence of established corporate conventions (“So, you’re saying that I shouldn’t have emailed that file to everyone who works at the company?”). You cannot take anything for granted when giving them direction because they have not been indoctrinated about how things are ‘supposed’ to be. Not only will they hone in on the parts of strategic sourcing that are missing, repetitive, or overly laborious, they may also have some great suggestions about how increased digitalisation should be allowed to change the process for the better.

Procurement solution providers
No one – except maybe the CEO – wants procurement to succeed more than your technology provider. If you win, they win. Chances are, your sourcing process has been in place for more than 18 months without a serious review. Actually, that is probably being generous: raise your hand if your sourcing process slide pre-dates Twitter. At the same time, the opposite is likely true of your strategic sourcing solution. Software as a Solution (SaaS) technology is constantly being updated and improved. If your technology tools have changed in the last 18 months, but your sourcing process has not, then you are almost definitely doing something too ‘manual’ – and missing out on new opportunities to leverage data and analytics. This is also an opportunity to learn from professionals who are constantly working with companies with different sourcing processes that you could learn from.

Strategic sourcing, ‘legacy’ process that it may be, played a huge role in making procurement the function it is today. Rather than walking away, procurement should focus on the objectives behind strategic sourcing – not the same old steps that you have seen thousands of times over – and make the necessary changes for it to enter or drive the next phase of procurement’s evolution. After all, few procurement processes have caught on with the same wildfire as sourcing. We just have to ensure that it isn’t left behind as procurement reaches a new level of maturity and assumes responsibility for managing increasingly complex categories of spend.

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