Ardent Partners is pleased to announce the publication of The State of Strategic Sourcing 2015: The Four Pillars of Sourcing Success report. Interested readers can download this exciting and informative annual research report by clicking here.
Every year, the pace of business continues to accelerate, forcing enterprise sourcing teams to adapt to changes and shifts within global markets in order to stay competitive. Although workloads and responsibilities continue to increase, sourcing teams remain understaffed with little relief in sight. As a result, collaboration, early engagement, process linkage, and automation have become valuable force multipliers to help extend a sourcing team’s impact throughout the enterprise, even as it remains stretched to its limits. This article series, based on the annual State of Strategic Sourcing report, will examine the pressures and challenges facing sourcing leaders today, as well as the strategies, capabilities, and technologies that they bring to bear. It will conclude with a discussion of Best-in-Class performance, followed by recommended strategies that sourcing teams can employ to accelerate their souring game into 2016.
Pressures and Challenges
For quite some time, the need to cut costs and increase savings has been the strongest business pressure facing Chief Procurement Officers (CPOs) and sourcing teams; although in 2015, just 51% of them regard this as the top pressure compared to 65% in 2011. Instead, CPOs and business leaders are feeling the heat across a broader array of “soft” pressures, like the need to increase the procurement department’s overall effectiveness and influence, the need to communicate the value (and performance) of procurement to stakeholders and budget leaders, and the need to increase the percentage of spend under management. All of these are related, of course.
One of the principal ways in which a CPO and procurement team is evaluated, apart from their ability to cut costs and increase savings, is to drive greater spend under management across the organization. In order to do that, sourcing teams need to move beyond the four walls of procurement into other departments and communicate the value of procurement to them and to the organization as a whole. Regular communication builds trust, which builds influence, which increases sourcing effectiveness, which drives greater spend under management, and ultimately cuts costs and increases savings. Simply put, CPOs and procurement teams feel pressured to communicate, collaborate, engage, and influence in order to achieve traditionally monetary measures of performance.
Challenges remain, however, in their bid to engage, influence, and perform. For starters, 41% of CPOs and business leaders indicated that they remain challenged to align processes and systems. Communication and collaboration can only take a procurement department so far if the processes and systems that they rely on to execute sourcing events are not aligned across the organization – for example, if the organization does not leverage an eProcurement system that links enterprise buying to existing contracts, suppliers, and invoicing/payment. Likewise, 36% of CPOs and sourcing teams report that they still do not have the staff or talent levels to support current or future requirements. Procurement departments that continue to be asked (compelled?) to do more with the same resources will eventually plateau in their performance without an infusion of fresh staff, talent, and /or business process automation tools that allow small teams to scale resources.
On that note, two additional challenges that CPOs and sourcing teams struggle to overcome are the lack of technology infrastructure (35%) and budgetary constraints (33%), which frequently are linked. Sourcing teams that lack the proper solutions and tools to execute scalable and repeatable sourcing events lack the ability to overcome resource restraints, automate operations, and efficiently reach internal and external stakeholders. Ultimately, this hurts their performance, and low-performing organizations seldom receive additional budgetary support to grow, expand, and upgrade. Before too long, the cycle of low performance continues.
Final Thoughts
Sourcing leaders and teams in 2015 continue to grapple with the familiar pressures of years past. But with a greater emphasis on “softer” pressures like communication, collaboration, engagement, and influence, they will have to emphasize different strategies and capabilities to cut costs/increase savings and increase the percentage of spend under management. In doing, they will have to overcome traditional hurdles, such as aligning systems and processes, staff/talent constraints, and the madness of lacking technology and budget in order to achieve these goals.
The State of Strategic Sourcing 2015: The Four Pillars of Sourcing Success is chock full of excellent insights and useful recommendations derived from the experiences and perspectives of over 300 CPOs and business leaders. Ardent Partners is making this report freely available to interested readers. Simply click here (registration required) for the free report and get started on building and maintaining a modern, innovative, and agile strategic sourcing program!
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