The Strategic Sourceror

Welcome to the Strategic Sourceror Blog. Dedicated to providing CEOs, CIOs, CPOs and Procurement Professionals with current business information, trends, procurement tips, industry news, cost-cutting techniques, and strategic sourcing best practices.

 
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Are You A Gambler?
Wednesday, June 11, 2008
Taking risk can be exciting. The rush of adrenaline and the thrill of winning gets more intense as the risk goes up. Or perhaps, the stress and anxiety increase and you have no fun at all. When it comes to your supply chain, are you a gambler?

Most companies have no formal risk assessment methodology or processes to mitigate risk in their supply chains. Many executives will agree that risk in their supply chain has increased in recent years, but few are taking any definitive action. Why? Are there a lot of gamblers in corporate America?

Quite often the attitude is "if it ain't broke, don't fix it". A lack of resources and short term goals force executives to focus on day to day operations and leaves little time for long range planning. Not knowing or not looking is equivalent to sticking your head in the sand. Your exposure may be far greater than you realize. Do you know where your suppliers get their raw materials and components from? What about your suppliers' suppliers? Are any of your suppliers having financial difficulty? Could they go out of business? What would a failure in your supply chain cost you?

Supply chain failure costs are far greater than most people realize. The impacts can be financial, loss of a key customer or customers, damage to company reputation, loss of competitive edge etc. Depending upon the degree of failure, the list can go on and on and my even result in the failure of the entire enterprise.

What can you do to reduce supply chain risk? Any plan should include the following elements: identify risks, develop strategy to mitigate risk, implement and monitor. Future posts will discuss each of these elements in more depth.

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posted by Steve Belli @ 2:21 PM   0 comments
Building your Strategic Sourcing Project Team – Part 1 - Sponsorship
Friday, April 11, 2008
Whether you are conducting a Strategic Sourcing initiative internally, engaging your supply chain vendors for a multi-level process-restructuring overhaul or hiring help from the outside consulting world, the first step of the process is often the most critical……building the proper project team.

Our series of posts “Building your Strategic Sourcing Project Team” aims to help you select the right team for the job. Part one of this post focuses on building proper project sponsorship.

The first step in your team building phase is perhaps the most critical, selecting the right project sponsor(s). A strong project sponsor is not only responsible for the selection of the right team for the initiative, but must also gain all internal and external support throughout the entire organization and supply chain.

A project sponsor does not necessarily need to be an upper-level manager or executive, but must have the full support of the entire management team. The most effective project sponsor is typically an individual that has been hand selected by the entire management team for their knowledge of all company processes and their ability to overcome internal roadblocks.

An individual that has been tasked with the strategic sourcing initiative in a single department, who must then go and attempt to gain support from other departments and business units, typically will not have the ability to make decisions and implement the changes that are often required for a successful cost savings event.

Most strategic sourcing initiatives will cross borders into many different departments, which makes it critical to have the entire organization aware and in support of the initiative. A project sponsor must be able to involve and communicate with all departments within the organization to ensure proper support throughout the company.

Without total support and awareness throughout the organization, it is not uncommon for an initiative to fail at the last hour:
• Take for example, a packaging department’s strategic sourcing initiative that has decided to standardize on corrugated materials. They go through the process of identifying the proper industry standards, qualifying and bidding the spend area, and testing the new boxes. Before implementation of savings begins, they find out that their marketing department specifically uses the existing packaging as the part of their corporate branding, or their largest customer requires the old packaging style and the entire project is ended or delayed.
• Or, take the marketing department that decides to focus on their online spending for website promotion. They evaluate different suppliers and tactics that can be used to help reduce spend, and begin the selection process. Close to the end of the initiative they decide to involve to IT department, which informs them that they have already been working on a new website and search engine optimization plan, which directly conflicts with the work that marketing has been conducting.
• Or, the Information Technology department that specifies a new VOIP phone system and the infrastructure to support it. They involve purchasing in the final hours to procure the systems, unaware of any existing supplier agreements or carrier contract termination penalties that may cost the organization tens of thousands of dollars.

These are just a few examples, it would be impossible to list them all. In our Strategic Sourcing consulting roles, Source One has heard many horror stories of wasted time, money and resources because of the lack of information sharing between different levels in an organization. The project sponsor will ensure that critical initiatives are communicated to everyone in the organization to ensure that events like this do not happen.

A good sponsor should be able to navigate the politics within your organization and bring attention to the roadblocks that arise during the course of the project. Often, the easiest path to overcoming a roadblock in any organization is simply making the rest of the organization aware that there is a problem.

A sponsor whose main concern is job security, afraid to step on the toes of those around them, or that does not want to disrupt the status quo will not be effective. Sure, they may obtain some results in cost reduction, but will not obtain the results that a proper initiative can deliver. The sponsor must know that they have the full support of the entire management team in order to an effective job.

Your project sponsor should be able to assist in the creation and development of the proper cross-functional team in your organization. In the next “Building your project team” post, we will focus on the criteria used to select your core team.

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posted by William Dorn @ 10:41 AM   0 comments
Upcoming Strategic Sourceror Procurement Topics
Wednesday, March 19, 2008

When Source One created the vision of the Strategic Sourceror blog, we wanted to create a forum that did more than just write about conferences and service providers. We also wanted to stay away from the obvious (indirectly) paid posts raving about particular software and service providers that you often see on similar blogs. Our goal is to provide a unique portal for procurement professionals to read tips, industry news, perspectives, and best practices in procurement.

Our ultimate goal is build a community of sourcing professionals that all contribute and help each other in developing best practices in procurement. As with our WhyAbe.com toolset (which is STILL free although most people in the industry said it was impossible), we encourage professionals to share their insights, tips, and suggestions to improve the procurement industry.

With that being said, we would like to announce some upcoming topics that you will see over the next several weeks:

  • “Fleet Management” - Discussing Best Practices for managing fleet services.
  • “Building your Strategic Sourcing Team” – Tips and best practices in creating a successful strategic sourcing initiative.
  • “Get Over It” – A continuous series that will help you overcome particularly difficult people and objections that you may encounter in a strategic sourcing initiative.

We encourage your feedback, ideas, tips, comments and suggestions for each of the posts. If you would like to contribute to our discussions or have some suggestions for contect, please contact us!

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posted by William Dorn @ 9:48 AM   0 comments
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