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 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.
Sourcing Capabilities
From a general capability perspective, respondents to Ardent Partners’ recent research effort indicated that process standardization and stakeholder collaboration are two significant trends that offer a rich opportunity for discussion. For starters, 65% of respondents reported that they have standardized their sourcing process, while another 62% have standardized their contracting processes. Standardizing these two processes, especially, aids one another in that information, like contract service-level agreements, terms and conditions, and pricing that were established during a sourcing event can be pull directly into the contracting phase. This should result in fewer errors, faster turnaround time, and greater assurance that the value that the sourcing team negotiated during the negotiation phase of the sourcing event is captured in the contract authoring and execution phase.
Unfortunately, just 42% of respondents have standardized their spend analysis processes, which can explain why so many sourcing teams struggle to gain visibility into so many sourcing metrics, like booked and realized savings, supplier performance and risk, and contract compliance. Spend analysis is the capability that keeps on giving: from understanding historical and current spending behaviors, to identifying valuable sourcing opportunities, to helping to audit contract compliance and supplier performance, spend analysis is a powerful process and tool that CPOs and sourcing teams should employ and standardize for maximum value. Despite relatively low standardization, 62% of respondents have somehow been able to leverage their spend data – however ad hoc and rudimentary – to identify sourcing opportunities, while 64% have been able to build an active sourcing pipeline. Considering the upside and utility of a standardized and automated spend analysis capability, there is tremendous growth potential for sourcing teams that prioritize standardizing spend analysis.
Regarding stakeholder collaboration, 60% of respondents indicated that they have “good or strong” collaboration with suppliers, while just 47% report such collaboration with line-of-business budget holders. As we prepare to move int0 2016, it will be absolutely essential for CPOs and sourcing teams to collaborate closely with their supplier base. The world has gotten smaller and it has opened up new markets from which organizations can source goods and services. But it also means that they risks have increased. Timelines have become tighter, natural and man-made disasters can cripple supply chains, and yet, consumers expect things faster, of better quality, and more competitively priced. CPOs and sourcing teams need to work with their supplier base to keep abreast of the changing tides of the markets, and both the risks and the opportunities that reside deep within.
CPOs need to do a better job of collaborating with line-of-business budget holders, for it is these leaders that can help CPOs sell their vision for procurement as value drivers for the enterprise. As a corollary, under-resourced procurement and sourcing teams need support from influential budget holders that can help make the case for investment in human and technology resources that can help sourcing teams scale and deliver more value to the enterprise. Overcoming the “chicken and egg” conundrum can be difficult even with executive support; without line-of-business budget holders lobbying for capital investments on procurement’s behalf, both the chicken and egg are as good as cooked.
Final Thoughts
As we move into 2016, a majority of sourcing teams have the capability to standardize key sourcing processes and collaborate with key stakeholders. But clearly, there is work to be done to see greater standardization of spend analysis and greater collaboration with line-of-business budget holders. Each, in their own way, holds the key to more effective sourcing opportunities and greater investment and support within the organization. Without them, CPOs and sourcing teams will be hard pressed to automate and scale the precious resources that they do have and deliver more value to the enterprise.
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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