The State of Strategic Sourcing

The speed and complexity of business continues to accelerate, forcing procurement departments around the globe to adapt to new market conditions and react to new opportunities while maintaining discipline and efficiency. Dependence upon supply chains continues to rise and sourcing has never been more critical to overall success. But, more than 30 years after strategic sourcing became a well-defined business process, and almost 20 years after the tools that could automate the process were invented, the key to sourcing success is no great mystery – teams just need to “connect the dots.”

Sourcing teams, with their myriad strategies, tools, and resources like strategic sourcing and spend analysis, are best positioned to extract greater value from their efforts when they align their systems and processes. But connecting the system and process dots only paints half the picture; sourcing teams also need the expertise to execute their projects and a level of enterprise engagement to ensure that they always work on the most important opportunities. While developing sourcing expertise is more directly controlled by the Chief Procurement Officer, procurement’s effectiveness and ability to deliver results depends largely on the level of influence that they wield over internal teams and budget holders within the business and other functional peers as well. Since most procurement teams and CPOs lack the centralized control to drive all sourcing and spending decisions, they feel the pressure to increase their overall influence within the enterprise, particularly as the expectations set for the procurement organization and CPO continue to rise.