Strategic Sourcing – Organize for Success
The eight Strategic Sourcing steps that we have identified can be grouped into three areas of focus: 1. Organize for Success; 2. Assess for Improvement Opportunities; and 3. Deliver Results.
In order to get off to a great start, you need to organize for success. This includes making sure that your organization and goals are aligned with the strategy you are trying to implement.
Evaluate and improve your organization and personnel
What does your purchasing organization look like? Are you organized to reactively buy or proactively and strategically source? A good way to assess this is to list all of your purchasing tasks, label each task as proactive or reactive, then determine how much purchasing time is spent on each. Most organizations that are not focused on Strategic Sourcing spend 75% or more of their time completing “reaction” tasks and 25% or less of their time doing proactive work. For Strategic Sourcing you need to reverse these percentages.
Now evaluate your personnel. How capable are they at doing the proactive work? For those not capable, is it a matter of training or are they in the wrong position? Provide the necessary training and upgrade your staff as needed. An interim step might be to reassign staff duties so your most capable personnel are focused on proactive work.
Develop your metrics and goals
Begin first with a review of your company’s strategic goals and annual operating plan and budget. What are the implications and challenges purchasing needs to address to support the goals and plans? Develop the purchasing appropriate purchasing goals.
Now take a look at your metrics. Discard any that are not required by your organization and do not support the goals you have documented. Then design the metrics needed to:
- Support the goals
- Facilitate needed analysis work
- Track progress
Now you have a capable function that is aligned with corporate objectives and purchasing goals and metrics in place. Our next blog will describe how you should assess for improvement opportunities beginning with gathering the data needed and analyzing your information to set the stage for proactive change.