The Sourcing and Stakeholder Disconnect

supplier management

This content is in part based on the Spend Matters e-book: Supercharging Category Management: Free Yourself from Siloed Sourcing to Unlock Breakthrough Value. Authored by Spend Matters Chief Research Officer Pierre Mitchell, it provides a new look at how procurement organizations can make true category management stick – and transform both the procurement function and the business.  

For those who are not deep into procurement, strategic sourcing sounds like little more than mumbo jumbo, or as my colleague Pierre Mitchell says in a recent analysis, “the n-step sourcing process can be unintelligible to a stakeholder.” And quite often, that’s in the best of cases – it gets worse. In certain cases, procurement can sound adversarial in relation to the business.  

Consider how the very first step, “profile the category,” immediately conveys the procurement organization pushing a certain set of categories where cost savings can be generated at minimal risk and effort (conventional/first generation procurement), rather than pulling from stakeholder requirements across spend categories and beyond sourcing, which helps them unlock more value from their spend.

Sourcing also fails to convey a modern, next-generation procurement organization’s brand, service portfolio and value. Procurement is not just about doing deals
 and pushing purchase orders. Likewise, category management is not a subset
 of sourcing. It removes the cross-functional and cross-company management of supply from the isolated sourcing process and brings it out to the broader lifecycles that set the context for supply: product, asset and, of course, supplier. If we take a forward-looking viewpoint of category management, we can begin to see it through this lens:

The transformation from category sourcing to category management is complex and multi-faceted because “categories” can be defined and managed in so many ways. What’s important here is not so much the exact name but the ability to apply all value improvement levers and to establish tight linkages, starting with bridging external to internal customers: to business units and your functional partners in R&D, IT, finance, HR, legal and operations. Further, for indirect spend, this is about tying into planning and budgeting; for direct spend, it’s about tying into new product development and supply planning processes coupled with sales and operations planning (S&OP) processes.

Curious to learn more or voice your own thoughts? Download the full e-book and let us know what you think.  

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