Is It Time for a Rebirth of Strategic Sourcing? – part 2

How do you keep the organization interested? How do you re-energize everyone? Here are a few ideas to consider out of a long list of possibilities

By ·

Category IV: “Standalone strategic sourcing.” Companies have tried to introduce and embed strategic sourcing without the supporting pillars of a transformation roadmap – and as a result have had a difficult experience. Leading-edge companies are smart: they introduce strategic sourcing as one element of a comprehensive transformation roadmap. That point is well made in this quote attributed to the ISM: “Without real procurement transformation, only 60% of the value of procurement initiatives are retained by year two. This value drops by 10% for each subsequent year.”

If you are in this category, you are leaving a lot of value on the table, and making success more difficult than it needs to be. For background on the essentials of the transformation process, you can download the article I wrote for Supply Chain Management Review: http://www.greybeardadvisors.com/resources/white_papers/


Category V: “Doing it well, but need to re-energize.” Finally, there are companies that have done all of the things I advocate, and have been sticking to it for an extended period. The original excitement may be diminishing as the sourcing and transformation process has matured, and the enthusiasm associated with early successes gives way to an almost-predictable pace of new results. How do you keep the organization interested? How do you re-energize everyone? Here are a few ideas to consider out of a long list of possibilities:

1. Rotate category sourcing and contract management assignments at least once every three years. (provides opportunities for “fresh looks and new perspectives”)

2. Make a visible commitment to Talent Management, including a minimum 40 hours of training per person per year.

3. Institute an internal certification for demonstrated strategic negotiations expertise (e.g. a Certified Negotiator program).

4. Expand involvement of technical experts and end users as sourcing team members.

5. Develop and implement a “supplier management program” to measure performance.

6. Implement a supplier recognition and reward program.

7. Implement a recognition and reward program for key stakeholder end users who demonstrate cost reduction innovation or contribute ideas to be explored. (Program design would vary based on organizational structure - concept is to create internal competition for recognition and reward).

8. Encouraging ongoing development of market knowledge for high volume spends or critical materials, to be formally updated at least every two years. (Many successful strategic sourcing efforts become less than optimal due to new opportunities for products and services or changing market dynamics; i.e. supply vs. demand, new entrants, supplier consolidation etc.)

9. Annual nomination of a specific number of products or services to be evaluated for potential outsourcing or insourcing based on changes in internal capabilities or external markets.

These are just a handful of the ideas that we have used in our corporate careers, and have worked with clients to implement as part of a transformation plan for their supply management activities.



About the Author

Patrick Burnson, Executive Editor
Patrick Burnson is executive editor for Logistics Management and Supply Chain Management Review magazines and web sites. Patrick is a widely-published writer and editor who has spent most of his career covering international trade, global logistics, and supply chain management. He lives and works in San Francisco, providing readers with a Pacific Rim perspective on industry trends and forecasts. You can reach him directly at [email protected]

Subscribe to Logistics Management Magazine!

Subscribe today. It's FREE!
Get timely insider information that you can use to better manage your entire logistics operation.
Start your FREE subscription today!

Article Topics

All Topics
Latest Whitepaper
SaaS Supply Chain Management Systems
A guide to better understanding the market, the software and the benefits
Download Today!
From the November 2016 Issue
The third time is the charm for this U.S. manufacturer on the hunt for a third-party logistics (3PL) provider that could successfully combine transportation services and technology capabilities under one roof.
Warehouse & DC Operations Survey: Ready to confront complexity
2016 Quest for Quality Awards Dinner
View More From this Issue
Subscribe to Our Email Newsletter
Sign up today to receive our FREE, weekly email newsletter!
Latest Webcast
Digital Evolution: Streamlining Logistics and Supply Chain Operations
In this FREE virtual conference we'll define the challenges facing operations and offer solutions designed to create dynamic, automated networks that offer seamless communication, improved collaborative third-party relationships, and the ability to respond to changes at a moment's notice.
Register Today!
EDITORS' PICKS
Logistics Management’s Top Logistics News Stories 2016
From mergers and acquisitions to regulation changes, Logistics Management has compiled the most...
Making the TMS Decision: Ariens Finds Just the Right Fit
The third time is the charm for this U.S. manufacturer on the hunt for a third-party logistics (3PL)...

Motor Carrier Regulations Update: Caught in a Trap
The fed is hitting truckers with a barrage of costly regulations in an era of scant profits....
25th Annual Masters of Logistics
Indecision revolving around three complex supply chain elements—transportation, technology and...