As Chief Procurement Officers (CPOs) know all too well, how and what you communicate during the sourcing process sets the stage for the resulting supplier relationship. And while that relationship may never become a true marriage of equals, there are several things that sourcing and supply management professionals can do to get things started on the right foot. This article series highlights seven important strategies and tactics that procurement organizations can use to drive savings while also maintaining and improving key supplier relationships.
Part Three: Tighter Specifications
One of the many benefits from the ‘early engagement’ in sourcing projects discussed previously is that it gives sourcing teams more time and a better opportunity to shape and rationalize end-user specifications. A better understanding of the business need and use of a specific good or service allows for sourcing professionals or teams to exert greater influence on the bid package, which can result in improved pricing, better quality or service levels, and frequently all of the above.
With enough time, sourcing teams are better able to engage internal stakeholders to clearly define the business need and desired outcome from the sourcing project and help the team discern between “must have” and “nice-to-have” requirements. Additionally, more time allows a sourcing team to better research the category and underlying supply market. For example, a sourcing team may choose to begin the process by sending an RFI (request for information) to the suppliers in the hope of discovering a new trend, delivery approach, or innovation that could significantly change the final bid specifications. Whether guiding internal stakeholders or collaborating with suppliers, getting better specifications does not have to mean dialing back requirements to focus on cheaper or inferior items/services. In fact, by spending more time with internal and external constituents, a sourcing team could discover new information that leads to a more expensive, but also, more valuable supplier contract.
Conclusion
Engaging with and managing suppliers is a key component of any Chief Procurement Officer’s priorities and focus. Doing so as early as possible allows sourcing and procurement teams to be able to best understand what the business need is (and isn’t) and how procurement can go about filling that need as cleanly, efficiently, and as tightly to specification as possible. Doing so can reduce the likelihood that the wrong materials, components, or services are procured, which can drive up the cost and drag out the timeline of the project. In this regard, procurement and its CPO can protect the bottom line and enable the product team to come out on top, on budget, on schedule and on top.
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