The Unrealized Potential Of Strategic Sourcing

Of course your company has a strategic sourcing policy! You have extensively negotiated contracts covering all aspects of sourcing products as well as services. So you are fully covered. There is no potential for more benefits. Or is there?

I discovered AT Kearney thinks differently. Recently during a visit I was discussing if everybody obeyed the purchasing rules, what the consequences were when they did not, and how to solve that. That is how I came across the AT Kearney publication on this topic. Interesting literature, and well worth reading!

AT Kearney found that on average millions stay on the table: Unrealized benefits! They uncovered some reasons for this:

• Implementation of strategic sourcing is difficult.
• Employees are unaware of possibilities, terms and conditions.
• Suppliers do not adhere to the contracts.

Identified important causes:

• The purchasing process is too slow.
• Employees deal directly with suppliers, because they lack a clear understanding of the possibilities.
• No difference is made between the strategical, tactical, and operational buying process: One process is supposed to fit it all.

And now some solutions. Actually 2 things are needed:

• A central and up-to-date catalog, with a fast and transparent purchasing process for all operational and tactical purchases.
• A monitoring process with a tool to check on any rogue spending in the purchasing chain.

In other words, you should consider strategic sourcing as an asset of your company, and treat it that way.

Are you curious how much money you can hold in your pockets, or how to take it from here?

Contact Hans Lodder at Results2Match.com.