Managing Indirect Spend: Enhancing Profitability through Strategic Sourcing
Subject Matter Experts Joe Payne and William R. Dorn, Jr. at Source One have authored a book to give a concise overview of the theory and practice of strategic sourcing principles.
The book Managing Indirect Spend: Enhancing Profitability through Strategic Sourcing was released on October 19, 2011, by publisher John Wiley & Sons. It is currently available for order at Amazon.com
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THE BOOK OFFERS SOMETHING OF VALUE TO NEWCOMERS TO STRATEGIC SOURCING, AS WELL AS SEASONED PROFESSIONALS. THOSE NEW TO THE DISCIPLINE WILL FIND A PLAIN-LANGUAGE GUIDE TO THE PROCESS FROM START TO FINISH. MORE EXPERIENCED READERS WILL FIND DETAILED EXAMPLES OF SPECIFIC CASE STUDIES AND APPLICATIONS, WITH PRACTICAL TIPS ON HOW TO SOLVE DIFFICULT SOURCING SITUATIONS.
The book is divided into four parts. Part one focuses on the theory of the process, and covers all the aspects important to keep in mind while designing a strategic sourcing project. Part two reviews the available tools, with discussions about their practical application. While theory is all well and good, most projects don’t progress in a straightforward, check-off-the-box fashion.
Part three tells the tales from the trenches, and how to handle unforeseen problems.
Part four finishes the book with step-by-step instructions on how to construct and implement strategic sourcing projects for specific indirect spend categories.
The contents of the book give a good overview of the type of information that a reader can expect to encounter.
Part One: The Process
- Chapter 1: An Introduction to Strategic Sourcing
- Chapter 2: Data Collection and Analysis
- Chapter 3: Conducting Research
- Chapter 4: The RFx Process
- Chapter 5: Score carding Suppliers
- Chapter 6: Negotiations
- Chapter 7: Get It in Writing: The Contracting Phase
- Chapter 8: Implementation and Continuous Improvement
- Chapter 9: What Not to Do during a Strategic Sourcing Initiative
Part Two: The Tools
- Chapter 10: The Importance of Market Intelligence
- Chapter 11: Tools to Assist You in Gathering Data and Expediting the Sourcing Process
- Chapter 12: Increasing Stakeholder Engagement
Part Three: Examples from the Field
- Chapter 13: Supplier Collaboration
- Chapter 14: Leveraging Supplier Feedback
- Chapter 15: Data Analysis: Transforming Data into Information
Part Four: How to Do It
- Chapter 16: Office Supplies and the Sourcing Process
- Chapter 17: Negotiating Local and Long Distance
- Chapter 18: How Cell-Phone Management Drives Continuous Cost Savings
- Chapter 19: Getting the Best Small Package Rates
- Chapter 20: Making Sense of MRO Spend
- Chapter 21: Analyzing Shipping Costs
- Chapter 22: Sourcing Services
About the Authors
About the Contributors
Collaboration is Key to Effective Strategic Sourcing
Excerpt from Managing Indirect Spend:
One stage of the strategic sourcing process that is often overlooked is the project kickoff. Regardless of your role within the organization, it is important to make sure that you are not operating in an isolated bubble. Others should develop an understanding of the goals and objectives of your initiative, from the executive team to end users and many in between…. In many cases, the greatest impediment turns out to be implementing change within the organization. All too often, purchasing or finance teams uncover an opportunity to reduce costs substantially and, naturally, believe that letting the facts speak for themselves is all it takes to make the necessary changes. Change, however, does not come easily, and even with the best business case you will find that having the support of the executive team or other higher-ups within the organization pays off.…
End users and other interested parties should be made aware of the initiative as well…. [E]nd users have a stake in the project, as they are dealing with the day-to-day realities of working with the supply base. Try to form a cross-functional team that includes members of several different departments: finance, purchasing, operations, and other affected parties. Having a cross-functional team allows you to get the perspective of a diverse group within the organization and aids in consensus building as projects move through the sourcing process.
The Focus is on Developing Competence in Indirect Spend Categories (Excerpt)
Many companies still do not apply strategic sourcing techniques to indirect spend categories. Instead, indirect spend is treated as a series of one-off purchases, or is sourced with a simple three-bid strategy with no efforts beyond reviewing the supplier price responses. Typically, with indirect spend, per-item prices are relatively low, the product or service is not crucial to the business, and the overall costs are rarely examined because of the difficulty entailed in gathering meaningful spend and market data. Strategic sourcing allows companies to shift away from thinking about indirect spend in this ad hoc manner, and provides spend visibility, objective decision making, and a project management tool to ensure efficient use of the sourcing team’s time and efforts.