Free Research Paper – The Five Principles of Sourcing, What and Why?

Trade Extensions - Strategic Sourcing

We have produced several research papers during the course of the past few months, some you may have missed owing to the holiday season. If that is the case, here is a quick reminder of what has recently been published that we believe will be of interest to you – all free to download on registration. The papers are written on a range of topical procurement industry challenges by our resident expert, Peter Smith, and include trends, analysis and advice. They are sponsored by firms that specialise in that particular field and often involve findings from interviews with senior procurement people in that area.

The Five Principles of Sourcing - What and Why?

This is the first in a series of papers for 2016 which look at why many successful firms have developed their own set of principles or values, which they use to define a corporate style, culture and way of working. We, in this research paper (in conjunction with Trade Extensions, the complex sourcing experts), have developed similar guidance for the world of procurement covering the core principles of successful sourcing activity and what might be achieved by laying out these “five principles of sourcing” and applying them to this particular business activity.

In this initial paper we explain what the five principles are: Alignment, Openness, Rigour, Coherence, and Commerciality, and why we chose them. Subsequent papers will look at each in detail. We then discuss why we believe such "principles" are useful, maybe necessary, and talk about how they can be seen as an underpinning philosophy which will help practitioners to deliver successful sourcing.

Here's an extract to give you a taste of what we are talking about:

With many large organisations spending 60 or 70 percent of their total revenues with external suppliers now, there is a growing realisation that managing this spend well through effective sourcing is not a nice-to-have; it is essential if the organisation is to thrive. So sourcing is now more complex and more important than ever, and doing it well offers organisations the chance to obtain real benefits, both absolute and in a competitive sense. With that in mind, and revisiting the reasons why organisations choose to develop their own principles, it does appear that similar justifications apply to our concept of the five principles of sourcing: ...

  • Corporate memory, culture and style
  • A manual of good practice and an educational tool
  • Appealing to people outside the organisation

We explain our thinking behind each, but you will need to read this first paper (free to download from the Trade Extension's library) to read the detail and understand the landscape for the five papers that will follow.

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