Strategic Sourcing is Not Enough

During a recent blogosphere debate about strategic sourcing, I offered six observations (see a previous post here). I want to elaborate on two of them today:

• Trying to introduce and embed strategic sourcing without the supporting pillars of a transformation roadmap is likely to generate only short-lived benefits
• Leading edge companies introduce strategic sourcing as one element of a comprehensive transformation roadmap. These companies are the ones most likely to be using true strategic sourcing (and other best practices) over an extended timeframe, yielding substantial and sustainable value

Not long after I founded Greybeard Advisers (after a 30 year corporate career in finance and procurement), I was invited to meet with the head of indirect procurement for a large company. During that meeting, the director of indirect procurement mentioned that five or six years previously, his company had engaged one of the big consulting firms for "a strategic sourcing program."

I was puzzled. "Why, then," I asked, "do you want to talk with us?"

"Simple," was the reply. "In spite of the initial success of the sourcing program, we have essentially nothing to show for it today. No embedded process, no upgraded skills, no strategic role, no sustainable benefits, zilch."

As it turns out, this company is not alone. Too many "sourcing programs" are not approached from the perspective of change management and sustainable transformation. Some of them, in fact, are driven by a desire to generate the infamous "quick wins," which often don't pan out over the long term.

As experience shows, becoming world-class in supply management takes much more than mastering one business process (e.g. strategic sourcing), or implementing the latest technology tools. Companies that have created sustainable transformation results have focused on many initiatives -- spanning six key dimensions.

The length of the journey can be shortened by developing a roadmap for change based on the learnings of other successful (or failed!) companies on that journey. And developing a relevant, comprehensive roadmap does not require a lot of time and money. Based on our experience, a full assessment and roadmap, including a business case presentation for your senior management, can typically be accomplished in less than 10 weeks.

And the reason to proceed down that path? The benefits from embarking on the transformation journey can literally mean the difference between long-term success or eventual failure for your company.

- Robert A. Rudzki