Sustained Sourcing Success
|Sustained Sourcing Success
by David Bush
October 6, 2006
In a recent edition of Supply & Demand Chain Executive, you can find the article Sustaining Strategic Sourcing Wins that indicates four enablers must be addressed to ensure a successful roll-out and savings over the lifetime of your company's strategic sourcing project.
The article, which states that making strategic sourcing work in the long-run is still a challenge for many organizations indicates that to sustain hard-dollar savings and continue to deliver results, companies must treat strategic sourcing as more than a one-time effort and that four enablers must be properly addressed to ensure a successful roll-out and prevent savings from being short-lived. Specifically:
- A center-led organization
A sustainable, long-term procurement organization sponsored at the executive level, where authority, roles, responsibilities and individual performance metrics are clearly defined is required. Stakeholders must buy into the organization and align with common objectives.
- Continuous improvement of skills
Sourcing professionals must develop and maintain proficiency in all aspects of the sourcing cycle and organizations need to identify the knowledge and the skill sets of their procurement staff and develop training plans to address any knowledge gaps.
- Processes and Technology Appropriate processes and technology must be in place to sustain long-term savings.
- Specific Performance Measures Only realized savings impact the bottom line and a formal set of measurement processes must be in place to track usage, pricing, user compliance to established contracts and supplier performance.
This is all sound advice, and all of the above are critical to long term success, (after all, over the summer I advocated center led models, a focus on talent, eSourcing Technology, and solid metrics) but I found the article lacking, because it skipped over a critical point - underneath it all you need a sound corporate wide supply chain strategy aligned with an underlying Total Value Management philosophy.
When you get right down to it, the fundamental reason I am working with Iasta is that I am convinced they understand the importance of building a sourcing suite on a solid premise, they get that Total Cost of Ownership alone is not always enough, and they understand that true decision optimization must be built on a Total Value Management philosophy in order for their clients to get the biggest bang for their buck. They see the next evolution of eSourcing and are working hard to get there. Are they the only vendor in the space that sees what the next evolution will be? No - but I'm pretty sure I'm right in my belief that most vendors do not have a good idea what comes next. After all, only a handful of companies can be leaders, and I'm excited to have another opportunity to assist one of the companies that I am predicting will be a future leader.