As sourcing becomes increasingly responsible for supplier relationship and contract management, personnel are often stretched too thin across multiple categories and suppliers to effectively manage expenditure. Furthermore, headcount within procurement groups typically grows at a rate insufficient to meet those increasing demands.
Utilising the internal procurement organisation in collaboration with third-party support can lead to more innovative solutions, new technologies, optimised supply chain strategies and improved category management.
According to Corporate Spending and Procurement Trends, 44% of survey respondents felt their in-house sourcing and procurement functions were under-staffed.
The survey suggests that sourcing and procurement teams are under-allocated, operating with leaner staff models and lacking in the necessary subject matter expertise to address an ever-expanding list of projects, spend categories and initiatives.
Confronted with new projects with evermore sophisticated supplier requirements, strategic sourcing may not have the in-house resources and market intelligence to handle these needs and identify best-in-class suppliers in evolving markets.
Furthermore, the need for a more strategic approach to sourcing and supplier relationship management is creating even more burden on these teams, regardless of industry.
Faced with these challenges, sourcing groups still need to adhere to policies and procedures and produce results, without the hope of adding headcount to sustain this work.
Therefore, procurement and sourcing groups can benefit from partnering with a strategic sourcing consulting firm to gain a competitive edge that entails broader subject-matter expertise and on-demand resources to support specific category needs, such as marketing, telecommunications, facilities management, raw and direct materials, indirect supplies, and more.
These third-party consultants help bridge the gap that often exists between strategic sourcing and a diverse set of business stakeholders, offering structure, guidance and market intelligence for all category-related sourcing activities.
With sourcing expertise and an understanding of various business categories, consultants can navigate through the challenges, serving as an extension of the strategic sourcing team by developing strategic plans to identify the best supplier partners and proactively pinpoint opportunities that will deliver results and value to the organisation.
Third-party consultants can help strategic sourcing get started with a spend analysis to obtain a better, more granular view of a department’s spend and contract activities. Categorising a company’s departmental spend and understanding the full supplier landscape will allow strategic sourcing to evaluate relationships, services and pricing across the organisation as well as against the marketplace. With this information, strategic sourcing can better determine areas where it can provide the most value to a company.
Consultants also work with strategic sourcing by collaborating with existing suppliers to ensure that the right level of value is delivered from the partnership. They support the establishment of new business relationships with service providers perfectly matched to the needs of an organisation. With a wealth of market intelligence, subject-matter experts can identify best-in-class suppliers and manage the entire sourcing process from the onset, through attendance in a project kickoff meeting to the execution of a competitive contract with the selected supplier.
Whether a company is experiencing tremendous growth or strong competition, a third-party consultant can help strategic sourcing maintain a competitive advantage by gaining control over spend and supplier relationships while delivering optimised results.
Evaluating collaborative models
Each organisation presents distinct challenges that can be addressed with a collaborative partnership. A flexible resource model helps companies achieve more with less – creating a competitive advantage and sustainable results.
Various models exist to support the procurement and sourcing functions within an organisation: what suits one company may not fit with another.
On-demand resources with a multitude of backgrounds and expertise can be applied to supplement or completely fill the role of a procurement department. In other scenarios, a short-term solution with extensive knowledge transfer and training of an internal team might be a better fit for a company with an immediate need.
Regardless of which model is selected it is important to consider the long-term effects of the sourcing activities. When evaluating model options it is important to be mindful of immediate and future ROI, scalability of the model and, most importantly, how the needs of the business will be met within a particular model.