What is strategic sourcing?
Throughout our “Summer of Sourcing,” we’ve looked at various aspects of the sourcing process, what sourcing leaders do to be more effective than their peers, and we describe “The State of Strategic Sourcing in 2013”. Sourcing is a powerful tool, that much is certain, and it is something worthy of our summer dedication; but, it also makes sense to discuss what our view of “strategic sourcing” actually is in 2013 since there are so many definitions floating around in the market today.
Most definitions of strategic sourcing describe a specific “framework” that comes with a defined series of steps in a process. Some definitions seek to impress with consulting jargon or a largely theoretical discussion but ultimately end up confusing the readers in what is at its core a basic procurement process. One popular definition that managed to avoid most pitfalls is that strategic sourcing is “the process of identifying, evaluating, negotiating, and implementing the optimal mix of goods and services that best support the objectives of the enterprise.“ But the world has changed since that definition was created by an analyst last decade – sourcing teams have matured, the business environment has become more complex, and the use of enterprise technology is now a standard operating procedure. To incorporate those changes and provide a more contemporary definition of strategic sourcing, Ardent Partners suggests adding these two corollaries to the above:
- The terms “strategic sourcing” and “sourcing” are converging to mean basically the same thing. Strategic sourcing in 2013 is not a static methodology that can only be applied to a large multifunctional project; the days of process overkill are behind us. Teams today must learn to take a more nuanced or agile approach to every sourcing opportunity. This means that while the same high-level steps may be followed across all sourcing projects, the level of rigor, analysis, and detail within each project should vary and be commensurate to the opportunity. As such, a strategic sourcing or “sourcing” program should incorporate all enterprise sourcing including the management of large, multi-functional strategic projects and those that are more tactical.
- To be “strategic,” sourcing in 2013 must use eSourcing (and, where possible, other supply management technology like spend analysis, contract management, and supplier performance management). The use of eSourcing does not change your strategy, it enhances it. A sourcing process that intentionally bypasses process automation can no longer be considered a truly strategic process
To read more on the topic, we recommend Ardent Partners’ State of Strategic Sourcing 2013: Speed is Good, Agility is Better which is now available at this link (registration required).
