The Five Principles of Sourcing – Spend Matters Top Papers

In the run up to Christmas and my passing over the Spend Matters UK/Europe reins, we’ve been featuring some of the briefing papers I’ve written over the last eight years. We’ll leave those published in 2018 – we will run through those again in the first week of January to get you back into work mode and thinking about serious matters again.

The Five Principles of Sourcing was a series we wrote with Trade Extensions, based on the Five Principles of Mars – both Garry Mansell, then MD of Trade Extensions and I worked for Mars early in our careers.  The five papers were (and you can download them via the links):

Part 1 – What and Why?

Part 2 – Coherence and Alignment

Part 3 – Rigour and Openness

Part 4 – Commerciality

Part 5 – Looking to the future

This is what we said when we first launched the series.

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This is the first in a series of briefing papers that will be published over the next 12 months around that theme. This first instalment is sub-titled “What and Why?” and is available for download now.

Many firms look to define their philosophy through principles, values or even a "credo" in order to provide guidance to staff in terms of how the firm wants to operate. So we decided it would be interesting - and useful we hope - to try and do the same for the business of sourcing. In the future papers, we will explore our five principles in some detail, but in this first paper, we cover the background and explain why so many successful companies promulgate their philosophies in this manner - what benefits are they trying to achieve?

We then get into our own logic for developing the “Five Principles of Sourcing” and ask whether they might really be beneficial to the procurement profession (the answer is “yes”, you won’t be surprised to know)!  Then we do the big reveal – what do we think are the Five Principles of Sourcing?

So, we know you are by now trembling in excited anticipation - just what are your Five Principles of Sourcing, you say? Well, here are the first three, in an extract from the paper itself.

Alignment

We will ensure that our sourcing strategies and activities are well aligned with the needs of our organisation and our internal stakeholders. That means understanding the business drivers in each case, whether cost, quality or other goals, and making sure our sourcing reflects those. We must also align with markets and suppliers, and work to resolve situations where the internal and external aspects are in conflict.

Openness

Being open to new ideas, products, services and suppliers sits at the heart of organisational success. It is impossible to generate competitive advantage by buying the same things and using the same suppliers as all our competitors, and curiosity is a vital quality for procurement professionals. This means we must collaborate with our internal stakeholders, suppliers and potential suppliers, and look to innovate with them in terms of specification, supply techniques, technology and process.

Rigour

Once we move beyond our basic requirements, sourcing is not a trivial, routine or simple process; it requires a professional and structured approach in order to generate good outcomes. We must approach it with careful planning, and make sure adequate skilled resource is engaged in the process. We will use appropriate tools and techniques to give us the best possible results in terms of selecting suppliers and agreeing robust contracts that deliver value and advantage to the organisation.
 

 

 

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