Lean Sourcing Maturity: Stage One

Please click here to read Part 1 and Part 2 of the posts that inspired this refresher series: Of the "10 Supply Chain Concerns for 2011"...5 Are Clearly in Procurement's New Wheelhouse.

It's rare we ever recycle content on Spend Matters. In fact, that's probably our biggest fault to date (next year, you'll see us improve at repurposing material for different constituents at varying degrees of depth and focus, but more on that later). But we think it's high time we revisited a concept that our sister site MetalMiner pioneered back in the last decade: lean sourcing. You can click on the above links for an intro to the topic, as we'll start today by highlighting the first level in a three-stage maturity model showing the characteristics of organizations that do lean sourcing well.

When procurement and operations teams begin to work together and bridge the gaps that often stand in the way of true collaboration, we usually see some characteristics that define what we term a "basic" level of maturity. The lean practices we see at this stage often focus on developing consistent supplier quality levels, deploying basic operational systems, assigning dedicated quality personnel, producing to forecasts, managing demand and deploying basic supplier collaboration tools (even shared spreadsheets are a start) to manage the areas.

In terms of sourcing at the basic level, we often see a transaction-oriented approach to buying which often focuses on extracting concessions from current suppliers. This general price orientation extends toward a focus on unit costs and the tools to achieve results -- spreadsheets, basic RFX tools and reverse auctions. In general, at this stage of sophistication, there is often a cognizant effort to monitor supplier performance issues, but this often occurs after the fact -- or incident.

In summary, organizations at the basic stage of lean sourcing have just begun to bridge the procurement and operations divide, with most teams still focused on optimizing outcomes based on their own silos and goals. Stay tuned as we examine the later stages of maturity.

Jason Busch

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