Andrew Cox on Sourcing Portfolio Analysis – Insightful and Important Thinking

Today’s book review, catching up on the backlog, is another where we may need to come back to it in order to give it full justice. Indeed, in this case, it may be necessary to study it for some years to come if we want to get the full value out of its contents.

The book in question is Sourcing Portfolio Analysis  by Andrew Cox. We suspect most readers will know something about Cox – the pioneering founder of the Birmingham University Supply Chain MBA course and a source of inspiration for a whole generation of procurement managers and leaders. He is also the founder of the International Institute for Advanced Purchasing and Supply (IIAPS), and a productive writer, adviser, educator and sometimes trouble maker (in the best possible sense) in our profession.

In this work, Cox aims to develop a whole new segmentation and positioning methodology for sourcing. In it, he demolishes pretty thoroughly many of the ideas put forward by Kraljic (Purchasing portfolio Analysis and the famous Kraljic matrix) and the aspects of Michael Porter’s “five forces” analysis that have relevance to procurement and supply chain matters.

For instance, he points out that much dominant thinking is that the best way to manage supply relationships is to seek collaborative relationships. His own theories are much more around power, the flow of value and the critical assets in that supply chain. So he gets deeply into Kraljic (and the alternatives to it) – for instance, pointing out that “collaboration could be used in both the “strategic” as well as the “leverage” quadrants, although with different sharing of value”.

He then lays out his own typology of strategic sourcing options, and a methodology for identifying the most appropriate sourcing strategies and tactical levers to use for specific categories and particular power situations. These later chapters will probably be the most useful for practitioners, and anyone developing a category strategy would benefit from reading and understanding this thinking.

In terms of style, Cox does not pull his punches; he is not a man who seems to suffer too many self-doubts. A typical section will start with something like this. “Kraljic failed to understand that the analysis of the “supply market” must start with the analysis of the power relationships between the buyer and each of the potential suppliers that is capable of supplying them”.

However, Cox can get away with it because he is, in our opinion, almost always right, as he has been throughout his career. (I say "almost" because I have found one passing remark that I might take exception to, but I’ll save that for another day!)

That makes this book a vital resource for anyone who is serious about really understanding buyer / seller relationships and sourcing categorisation. However, it is not the easiest read – there is a lot of content and it is not always laid out for ease of use (too many italics for my liking!) But if we assess on content rather than artistic impression (for those who remember ice-dancing marking schemes), this is an important and essential book. And it is only £20 – a real bargain these days in the world of business books.

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