Sourcing is a continuous, iterative and comprehensive activity which can profoundly impact the direction and effectiveness of an organisation. The scale and scope of sourcing projects can vary enormously and the approach to a project should be specific and targeted. Supplier selection is a major component of any sourcing approach and technology can greatly facilitate many aspects of the sourcing process.
Sourcing is usually one of the most efficient ways to achieve savings. There is though, a significant difference between those that do it and those that do it well – top performers for example can achieve four times the savings compared to the average organisation.
Usually, for mid to large organisations, this is a difference of many millions. Savings are typically lost because of poor strategy, tendering, negotiations & compliance.
Our business considers best practice to divide the organisations into two categories:
- Mature procurement functions that already have an existing sourcing platform and team
- Growing procurement functions which do not yet have a clear team structure or set of defined responsibilities
Best practices for mature procurement functions
- Add appropriate people to the team so more ground can be covered
- Advise on event set-up and manage execution and delivery of increased savings
- Coach, train and develop in-house team
Best practices for fast growing procurement functions
- Complete data cleansing, consolidation and analysis
- Develop sourcing roadmaps
- Design and structure sourcing events
Benefits of using strategic sourcing
- Getting more value out of your procurement function
- Having a global supplier network
- Cost reduction
- Having an innovative procurement function
Having a strategic approach to sourcing can help your organisation in many ways. As we all well know, one of the most important objectives of a CPO is the delivery of savings, strategic sourcing plays a crucial part in achieving this target.
Strategic sourcing in not a one time strategy either, but a constant process which needs to take place in a world-class state of the art procurement function.
In addition, carrying out a sourcing strategy can really help your business improve the company’s profits and the overall procurement effectiveness.
If you are interested in finding out more about strategic sourcing and how can it affect your business, let’s have a chat!