Defining Complex Sourcing – and Why It Matters

complex sourcing

Earlier this year, my colleague Peter Smith, who serves as managing director of Spend Matters UK/Europe, wrote an outstanding paper we somehow overlooked on this side of the Atlantic. The topic of his analysis: What Defines Complex Sourcing – and Why Does It Matter? In the coming weeks on Spend Matters, I’ll highlight some of the more salient ideas from the analysis and offer some additional commentary as well.

Peter begins his argument by asking 2 questions: “What is ‘complex sourcing?’ And, more to the point, if this debate is not to be merely an intellectual exercise, why is it important for procurement practitioners to understand what it is?”

In his view, “A complex sourcing task, process or program relates to the choice of supplier and contracting phases that we tend to consider as the core of the end-to-end strategic sourcing process. And ‘complex’ means what it says on the tin – a more than usually difficult or challenging example of that task.”

There’s also the fundamental question of why complexity should matter at all in separating or segmenting procurement and sourcing programs and initiatives. Peter suggests, if we accept his definition above, “there are a number of good reasons to ensure procurement practitioners and functions do get to grips” with complexity.

These include:  

  • Prioritization. Because, by definition, “complex sourcing is more challenging for procurement to execute successfully, so it is important that procurement leaders consider prioritisation of this sort of work in terms of the resources, focus and effort that are put behind it.”
  • Skills, Capability and Resource. These matter because “complex sourcing requires advanced skills from procurement professionals. It is a very long way from running through a standard ‘issue a tender and choose the lowest price’ process.”
  • Complexity tends to define opportunity. “As we will see, where there are many alternatives, a complex demand picture, multiple suppliers and offerings, there will be many different potential approaches and options, and therefore more chance of achieving competitive advantage through the sourcing process.”
  • Use of technology. This matters because “understanding where specialist technology can be most beneficially used in sourcing is another critical issue, and one that can contribute to achieving that value and competitive advantage.”

Stay tuned for further coverage from Peter’s analysis and additional thoughts – to add to the complexity of the topic. You can also download the full paper: What Defines Complex Sourcing – and Why Does It Matter? (Registration required.)

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