Spend Matters welcomes a guest post from Art van Bodegraven. When I use the term Anticipatory Sourcing without setting the stage fully and correctly with an audience, even an audience of one, the reaction is eerily reminiscent of the late and much lamented Richard Pryor exclaiming, "Say what?!?!?" (Shades of the cult classic film, “Stir Crazy.”) But, at the risk of offending and alienating, I will stake out the position that, unless you are doing anticipatory sourcing, you are taking up valuable space that ought to be occupied by someone more motivated, more aware, more understanding and, possibly, even a bit more intelligent.
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When you get into sourcing for specific categories, the category of raw materials doesn’t get the attention it deserves. Inflexible pricing, complex quality standards and a rising cost-of-change effect have combined to increase the need for a successful and advanced sourcing methodology. Enter the Spend Matters team and Trade Extensions for our upcoming webinar, Category Lessons: Applying Advanced Sourcing to Raw Materials. Join us Wednesday, July 29 at 10 a.m. for this live event. Register today!
In the first installment of this post, I considered the applicability of lower-end sourcing tools and when they’re most likely to be a good fit for organizations and under what scenarios. Today, as I continue this analysis, I’ll take the other side of the argument focused on when these tools can even do more harm than good, starting first with one of the biggest issues with e-sourcing technologies in the first place – the most valuable features all-too-often sit on the shelf, rarely if ever to be used by procurement organizations.
The slowly fading recession has left a profound impact on pricing in sourcing contracts. That impact is seen in a trilogy of forces with long-term ramifications that will keep pricing at recession-era levels for the foreseeable future, even as contract volume rebounds with pent-up demand. This “new normal” imparts lasting implications on future sourcing agreements. There's a trilogy of forces keeping downward pressure on prices. Read on for what these are and for the implications of this new normal on pricing for future sourcing arrangements.
Get the Spend Matters viewpoint on sourcing and its transformation into supply chain with a new, downloadable paper from Jason Busch (managing director). "When Sourcing Becomes Supply Chain" enforces the notion that data-driven analysis in procurement is essential and already underway. This movement can benefit organizations and businesses from various industries, and the paper digs deeper into the continuing outcomes that can be expected when sourcing and supply chain become one and the same.
Over at our sister site, MetalMiner™, the Monthly Metal Buying Outlook report has officially launched as a commercial product! If you are sourcing direct materials then this is the report for you – an annual subscription (12 reports) can be yours for $899/year. This report compiles all the fundamental information for aluminum, copper, nickel, lead, zinc, tin and/or steel (HRC, CRC, HDG, Plate) in a single, easy-to-read executive overview. It includes analysis of the technical factors affecting the price of each direct material and offers specific levels to watch and strategies to employ. Subscribe today!
When I first read about strategic sourcing in Forrester, IDC, and Gartner reports back in 1999, I thought the analysts had no clue what procurement was. But then I realized that they were specifically referring to another IT-centric definition of strategic sourcing, rather than one focused on broader procurement, finance, and supply chain. I came across a more recent article in Data Center Dynamics.
In the first of this two-part series, I briefly traced the evolution of IT strategic sourcing requirements, courtesy of a Data Center Dynamics column discussing an IT perspective on the evolution of procurement priorities and requirements. Today, we come to some of the specific requirements that IT sourcing programs have, including the need to focus on the full lifecycle of a supplier engagement to monitor and track savings. These include monitoring metering, charge-backs, and other areas.
Before diving into what defines a complex sourcing process or initiative, it is instructive to consider what does not. That helps illustrate the issues and clears up some of the confusion that is often seen around sourcing exercises. While there are several critical factors that may make a sourcing process seem complex, few of them are enough to drive true sourcing complexity as Peter Smith defines it in his paper, What defines complex sourcing – and why does it matter?
Category sourcing has been one hot, trending topic around these parts as of late. Our downloadable e-book and preview webinar on category management have been wildly popular and we are concluding our coverage with this comprehensive, must-attend webinar: Supercharging Category Management: Free Yourself from Siloed Sourcing to Unlock Breakthrough Value. Join us tomorrow, Oct. 22, at 9 a.m. CDT, for what will surely be a lively discussion as Pierre Mitchell, chief research officer at Spend Matters, is joined by Mickey North Rizza, vice president of strategic services at BravoSolution, to discuss going from simple category sourcing to category management 2.0 in just nine steps. Register today!
So far in this series, I have written about both the strengths and some of the limitations of basic sourcing tools – and when organizations should consider using them as opposed working with those that really do specialize in supporting more advanced sourcing organizations and sourcing requirements. Another key area that I’ve observed again and again in my research (including both public and private sector) in the case of more advanced tools is when organizations must have sourcing applications reflect heavy levels of governance and process based on regulatory or other requirements.
Brand new hot-off-the-press research is now available from the Spend Matters team! Jason Busch, founder and managing director, and Thomas Kase, vice president of research, present The Past and Future of Strategic Sourcing – Looking Back to Look Forward at E-Sourcing. What does the future hold for strategic sourcing? Have we reached the full value potential for this segment or are there even more savings to be had? Get the full story here!
From one of the most popular e-book downloads in Spend Matters history to an equally popular preview webinar, we're now ready for the main course. Join us Thursday, Oct. 22, at 9 a.m. CDT, for the webinar Supercharging Category Management: Free Yourself from Siloed Sourcing to Unlock Breakthrough Value. Pierre Mitchell, chief research officer at Spend Matters, will be joined by Mickey North Rizza, vice president of strategic services, BravoSolution, to walk you through the nine different ways you can effectively transition from category sourcing to category management 2.0. Register today!
In just two weeks, we'll present the concluding webinar from our ongoing coverage of Supercharging Category Management: Free Yourself from Siloed Sourcing to Unlock Breakthrough Value. Join us Thursday, Oct. 22, at 9 a.m. CDT, as Pierre Mitchell, chief research officer at Spend Matters, and Mickey North Rizza, vice president of strategic services at BravoSolution, present the nine different ways you can evolve from simple category sourcing to category management 2.0. Register today!
We've recently been covering the travails of the latest scathing report to hit federal strategic sourcing circles: NASA’s inability to implement a strategic sourcing program including agency-wide spend visibility. The following is an excerpt from NASA’s Inspector General’s Report into one particular failure to use a strategic sourcing program to drive savings. It’s too good to not print in its entirety.
Sourcing complexity can serve as a barrier to pursuing potential high-reward and high-risk procurement initiatives. But complexity does not have to stand in the way of savings, total cost or other improvements. Identifying how to pinpoint complexity is essential. An important place to start here involves fully exploring factors that drive sourcing complexity. In the paper
For those with total cost on their minds, re-shoring remains a hot topic – especially from the standpoint of factoring both price and risk into the supply chain equation. But in certain industries and categories, in-country or local sourcing is in fact the right strategy from the start. I came across an article in AMD that points out just how critically industry certifications and regulation can factor into the sourcing equation for markets such as A&D with specific requirements.
Sometimes “choice” in procurement is precisely what not to give to practitioners. This is especially the case as we consider the latest scandal to envelop NASA, who failed to implement a strategic sourcing and spend analysis program (see here and here) that provided even a modicum of leverage and visibility into spend within the agency. One “excuse” the agency provided was the numerous options for procurement that were available.
Did you miss our webinar last week on supplier collaboration in strategic sourcing? Fear not because it is still available. Check out the recording of “Supplier Collaboration in Strategic Sourcing: an Oxymoron?” while it is still here to listen to! Thomas Kase (VP of Research) and Pierre Mitchell (Chief Research Officer) have also written a paper that provides helpful background if this topic is one of particular interest to you.
Drawing from the Spend Matters perspective When Sourcing Becomes Supply Chain, Jason considers the various constraints and requirements of an extended supply chain. There are trillions of potential permutations of optimal supply chain designs to ensure the highest possible fill rates, how to manage unit and total costs, improve sustainability metrics, and so on, but only one optimal outcome.