The Future of Sourcing – Category Management and Centres of Excellence

In the four short papers published already in our Five Principles of Sourcingseries, sponsored by advanced sourcing gurus Trade Extensions, we have looked at the overall concept, and then described all five of the principles - Coherence, Alignment, Rigour, Openness and Commerciality.

In our fifth and final paper, just published, we look at how sourcing might develop over the next few years.  We believe the principles we have outlined in the series will prove pretty robust into the future, but there will undoubtedly be changes in what is perceived as sourcing good practice, driven by technology and other factors.

Here is an excerpt from the paper, and you can download the whole thing now from the Trade Extensions website.

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The Future of Sourcing

Here then are our ideas in terms of how the whole field of sourcing (and related activities) might develop over the coming years. But none of these are wild futuristic predictions; indeed, they all build on developments that can be seen in leading organisations today….

Category management processes will evolve

This is something we first covered in another paper – “Sourcing Optimisation – Extracting Value from Complexity”. As we explained then, “traditional” category management processes relied on procurement professionals carrying out considerable research in order to (in effect) narrow down the scope of the bids from suppliers who compete in the competitive tendering process.

That was really for convenience: because of the complexity inherent in running structured and fair supplier selection processes, procurement just had to simplify, to restrict the choices and options for potential suppliers. “We can only consider your bid if you fulfil all our conditions, from a to z” was the approach.

But advanced sourcing platforms enable the buyer to ask suppliers for their proposals in a much more open manner, than analyse the responses and optimise the solutions. “What if” questions can then be asked, to test conditions and constraints. None of this invalidates the basic and fundamental principles of category management, but it will require a different approach in terms of structuring sourcing exercises. Category managers may carry out less of the detailed initial research, but will need to focus on understanding how to open up the process and then ask the appropriate questions to arrive at the best solution.

 

Sourcing “centres of excellence” will become common

Whilst using technology for sourcing exercises will become more democratic and devolved, as described in point 2 above, at the same time, the most complex sourcing and “beyond sourcing” exercises  encompassing wider supply chain and operations planning and strategies) will require considerable skill to run effectively.

Equally, even if more non-specialist staff are involved in the more run of the mill sourcing exercises, they will need guidance, governance and training. So we believe that organisations will increasingly set up small but highly skilled centres of sourcing excellence that will have two broad functions. The team will run the most complex exercises that require a high degree of skill and experience. They will also lead on that central guidance, education and governance role out into the wider organisation and the devolved user base. This is already beginning to happen in some leading firms and is likely to become more common.

 

To read more about “cognitive procurement”, category management developments and our other thoughts for the future of sourcing, download the paper from the Trade Extensions website here.

 

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