The article below is written by John Calia on November 6, 2011
With a virtual smorgasbord of competition, limited resources, overlapping inter-department roles, unclear processes and hand-offs, and the list goes on and on, how does sourcing secure a seat at the table to ensure supply source selections are maximizing value for the company? Yes, sourcing associates’ business counter-parts are their customers. Even though these stakeholders are the customers, the customer is not always right. However, the customer is always the customer, which is where the budget resides.
Sourcing must consider enterprise relationship building a top priority in their department’s strategy in order to move from the little table to the big table. Developing relationships with business budget owners is necessary to explain the value added the business gains in support of its goals through sourcing expertise. This is simply summed up in the insurmountable loss of leverage incurred through stakeholders not engaging sourcing in their interactions with suppliers making the completive bid process nothing more than a formality. Engaging sourcing expertise from the get go ensures repeat business through orders for sourcing support and prevents the plan from becoming stale. Sourcing must invite itself to the table, how else should sourcing expect to get a slice of pie?
To embed sourcing in a process where it already should requires that the following be accomplished:
- Sourcing Seen as a Business Partner: Align both organizations to achieve mutually shared goals in support of company objectives based on shared metrics to ensure success
- Co-Develop a Sourcing Pipeline: Forecast projects requiring sourcing support as a part of the annual budget cycle to verify budget and establish internal reviews so plan remains current
- Invest in the Relationship: Oversee requirements gathering in collaboration with stakeholders to develop a sourcing strategy to coincide with mutually agreed upon goals for the project
- Demonstrate Sourcing Value: Reevaluate supply base and contracting for goods and services to match evolving requirements and use sound methodologies and proven processes to consistently deliver sourcing savings
Gaining stakeholder trust is the first step in creating a sourcing pipeline. The primary focus of this activity centers around building a relationship with the business so sourcing is seen as a partner that adds value to the process. Through the strong rapport you have fostered you are able to co-develop a realistic, sourcing pipeline focused on projects tied to the overarching company strategy, which themes should trickle down to sourcing and business department goals. In order to continue to strengthen this newly developed plan that has aligned both departments, you must invest the time and resources required to nurture the partnership with the business. Lastly, you must consistently demonstrate the value from sourcing — show the fruits of your labor. Now that you have a partnership in place you need to maintain visibility for the sourcing department by showcasing the positive results from negotiations.