The Strategic Sourcing Plan of Attack
PurchTips - Edition # 105 July 24, 2006
By Charles Dominick, SPSM
Does Your Strategic Sourcing Plan Flow Nicely?
Every strategic sourcing organization should have a long-term plan for its work. I suggest a three-stage plan.
Stage 1: “The Easy Wins.” When launching a new process, starting with little risk and gradually accepting more is wise. So begin your strategic sourcing initiative with a category where success is easier to achieve.
Office, shop, and janitorial supplies are often the first “easy wins” pursued. Why? Well, in these industries, there are many good suppliers who compete hard against each other. In many cases, any big supplier can perform. And the price wars you incite can produce nice savings.
Demonstrating that good performance and sizable savings can be achieved through strategic sourcing is vital - when a strategic sourcing initiative is announced, your internal customers aren’t exactly throwing confetti and high-fiving each other in the hallways. They are skeptical. Good results in Stage 1 will help your cause.
Stage 2: “Bread & Butter.” After the strategic sourcing concept is proven in Stage 1, then organizations tend to address their “bread and butter” – those products and services that are close to the core of what they are in business to do. In manufacturing, the bread and butter includes raw materials and subcontracted services.
Bread and butter categories are where big money is spent and where big money can be saved. But there’s also bigger risk, so you must perfect strategic sourcing before you mess with your organization’s core competency.
Stage 3: “Non-Traditional Categories.” So after a purchasing department gets through Stage 2 and saves the company tons of money, does the staff just sit back and revel in their success? Of course not! They now seek other opportunities to use sourcing to save money.
Stage 3 involves addressing categories that have been traditionally managed outside of purchasing. These areas include health benefits, advertising, travel, and fleet services. Identifying these areas and learning to work with your new internal customers is a challenge all to itself. We’ll address the challenges of sourcing non-traditional categories in a future edition of PurchTips.
(keep reading for a FREE Offer)
Spotlight On Professional Development Opportunities
Are you tired of not getting enough opportunities, respect, and money out of your purchasing career? Well, guess what? Nothing will change unless you take action towards becoming a world-class purchasing professional.
You see, today's employers refuse to reward employees for yesterday's skills. They demand that purchasing professionals like you use the most modern skills and achieve unprecedented results. They want you to save more money, achieve better operational performance, and reduce risk.
Earning your Senior Professional in Supply ManagementSM (SPSM) Certification is the action to take if you want to bring the most modern purchasing practices into your organization and achieve your career potential. Learn how to earn your SPSM CertificationSM at:
- Next Level Purchasing has launched its newly redesigned Web site! Click a link to check it out!
- Do you supervise other purchasers? We have a service just for you. Read more at www.NextLevelPurchasing.com/manage
- Are you considering a career move? There are over 75 purchasing jobs preferring candidates with the SPSMSM Certification posted at www.NextLevelPurchasing.com/jobs
There are four irreversible business and technology trends that are likely to cost purchasers like you their jobs in the next 12 months. Do you know what they are? Do you know how to protect yourself from their effects? If not, you should get your FREE report entitled "Career Survival In Supply Management."
"Career Survival In Supply Management,"follow the instructions at