The Five Principles of Sourcing – more on Coherence and Alignment

A little while back, we launched our Five Principles of Sourcing idea.  Inspired by conversations with Trade Extensions, whose software supports the most challenging, interesting and tricky sourcing work in the world, we have defined five core principles that we think everyone should bear in mind when looking at developing and implementing sourcing strategies.

We will be covering these in some depth through this year in a number of short briefing papers, and we are now promoting number 2. It is available for download (free registration) here and you get the first paper too (just in case you missed that).

Our concept is modelled broadly on the principles and credos that successful firms such as Mars, Ikea and P&G use to define their philosophy and style. The best examples actually mean something and affect corporate behaviour in a positive way.  So, after careful thought, our five principles of sourcing are Coherence, Alignment, Rigour, Openness and Commerciality.  

In this paper, we cover the first two principles – Coherence and Alignment.

Here is an extract where we explain more about “coherence” and in particular the concept of “clarity of intent” within the end to end sourcing process, from the initial definition of the requirement and first contact with suppliers to delivering the contract.

A clarity of intent

What are we trying to achieve through the particular sourcing process? "Buying goods or services the organisation needs" is the simplistic answer, but we need to dig somewhat deeper and ask "why?" What is the purpose of the goods or services being procured and how do they contribute to the strategic goals of the organisation? Are they simply operational tools to keep the business running or do they contribute directly to customer preference or experience; do they in some way form part of the competitive advantage that the organisation seeks?

These are important questions, and procurement (as well as other key stakeholders) needs to understand the intent behind the sourcing, for two reasons:

Firstly, it is important that the market and potential suppliers get a clear sense of what it is we want, and understand how the requirements fit into the wider picture. So we should be able to communicate those messages in a   coherent fashion. A simple example: do we want a cheap and cheerful low-cost proposal, or an innovative solution that might cost more but bring significant benefits? The answer to that question should flow from the initial thinking about the strategic purpose.

Secondly, that intent should flow through specific stages and sub-stages within the sourcing process. Elements such as evaluation of bidders and proposals should link clearly to the strategy underpinning the purchase.

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Please do download the whole paper for more insight – and we’d really welcome any comments about the whole “Principles” concept.

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