Spend Matters welcomes a guest post from Andrew Bartolini, Chief Research Officer at Ardent Partners and publisher of CPO Rising.
1) Do we really need another scorecard? How can this help to get folks on the same page?
Ardent Partners’ latest research report entitled CPO Rising 2012: Keeping Score, which was based responses from more than 260 procurement professionals, showed that:
- More than 40% of all enterprises lack an active sourcing program and/or sourcing pipeline
- Roughly 60% of CPOs feel their staffs are undersized
- Almost one-third of all enterprises only do manual sourcing
This tells me that there are many sourcing groups that are not using any tools today and probably need some help jumpstarting their sourcing program.
By introducing a standard analysis and approach to evaluating different categories, the Category Sourcing Scorecard can help sourcing teams properly order their categories into a sourcing pipeline or wave plan.
2) But will it work for anything but generic categories? Aren't the nuances of complex services (like marketing) too hard to capture in a one-off list of questions?
The Scorecard asks 22 multiple choice questions across five areas of consideration that will apply generally to all categories (direct, indirect, and services) and seeks to balance the category’s sourcing opportunity with ease of execution and implementation.
The scorecard tries to help teams identify complex or difficult situations (i.e. many stakeholders, highly-specialized suppliers, complex specifications, how it’s procured, etc.) by raising red flags that indicate the category may require more time or resources and/or longer lead times to source successfully.
Now, will the scorecard work perfectly for every category? No. But we think there’s a benefit to having sourcing teams evaluate categories across a consistent set of internal, market, supplier, buyer, and category-specific factors.
3) Ok, so I fill this out. Then what the heck do I do with it?
The Category Sourcing Scorecard is a tool designed to compare/contrast different categories. So a category’s final score is only useful in the context of other category scores.
The idea is that you and other members of your sourcing team will score your individual categories and generate a final report for each that includes a raw score and some high-level recommendations and considerations. Since this is a ‘quick & dirty’ analysis, we recommend that sourcing teams review/discuss the different category scores and recommendations, validate the relative ease or challenges of sourcing the different categories, and then build out the sourcing pipeline accordingly.
4) Will this make it easier to ultimately implement savings once sourcing is complete? If so, why?
The scorecard doesn’t change a category’s parameters or what’s required to run a successful sourcing project or implement a new contract but it can help to identify potential problems or risks that may arise along the way. As a result, teams are prompted to work proactively to address those issues.
5) Give us an example or two of what using this scorecard has done for individual procurement teams?
The scorecard has only been out a short time, but I’ve had positive feedback from a few sourcing pros including a director at a global manufacturer who introduced the tool during the two-day sourcing training that he ran last month. He used the scorecard as a way to teach sourcing strategy development. One CPO friend at a financial services firm told me that his team had started using it as they begin their first year using an eSourcing tool. He has had different team members score a category and present the findings at their weekly department-wide meeting.
6) Last … how can the answers and scorecard live on besides in Excel? Isn't the idea to banish Excel from procurement hand??
Ideally you’d attach the final report to a web-based sourcing project management tool or include the information in a category strategy document or eSouricng project; but, it really depends on the other tools and resources that a sourcing team currently has in place. Let’s not forget that for many teams, using Excel would be an improvement over current processes.
The Category Sourcing Scorecard is sponsored by BravoSolution and available along with the recent Category Sourcing webinar, where Andrew discusses and demonstrates the scorecard and Ardent Partners’ CPO Rising 2012: Keeping Score report are available here (registration required).
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