Yesterday, we completed our discussion of the unique buying factors that help determine a category’s suitability for sourcing.
Today we tackle the final subset of considerations for the virtual Category Sourcing Scorecard (click to read the entire series) – Category Specific Factors.
It’s important to remember that the purpose of the scorecard is to perform a quick scoring of each individual category by looking at certain key factors that can help prioritize a sourcing pipeline. The goal is get a good indicative sense of each category, not develop a final sourcing strategy, although this tool can certainly get the ball rolling in that regard. I mention this point because we’ve only included three category-specific factors below – including every possible factor would limit the usage and power of the tool. Again, I welcome your feedback on today’s list and all the others.
These factors are the unique attributes of a category that may either lend themselves to sourcing or not. We’ve included three in this subset.
Factor 1 – Strategic Impact
Discussion: Similar to the “Production Impact” found in the buying factors which looks at a category’s impact on the process of producing its final products and services, this factor looks at how critical the category is to the overall performance of the business and the attributes of the products and services that it supports. For example, no company has ever lost a multi-million dollar bid because of the brand of pens it uses in its office; however, the type of glass or processors used with the company’s new tablet may have a huge impact in how well the overall product performs its key functions and how well it sells in the market.
Scorecard Question: How critical is this category to business performance and business results?
Multiple Choice Answers: (A) Not critical (B) Somewhat critical (C) Highly critical
Factor 2 – Category Complexity
Discussion: Simply put, the greater complexity involved in the production and/or delivery of a product can make it more difficult and/or time consuming to evaluate or distinguish different suppliers and different samples. The complexity may be something that is embedded in the actual category, how it is delivered, and/or how it is used.
Scorecard Question: Describe the level of complexity associated with this category.
Multiple Choice Answers: (A) High (B) Average (C) Low
Factor 3 – Lead Time
Discussion: This factor looks at the time it takes between an order and delivery. The reasons for this length of time can be quite varied: geography, method of production, order size, etc. The thought with this factor is that longer lead times add to complexity and risk. Also, longer lead times, in the case of sourcing direct materials, will result in a longer process to evaluate samples.
Scorecard Question: What is the order lead time required for this category?
Multiple Choice Answers: (A) More than 2 weeks (B) Between 1 and 2 weeks (C) Less than 1 week
We’ll come back next week to close out the series and move on to some other new topics and Chief Procurement Officer News. Thank you for another great month and quarter of traffic on CPO Rising!