I’m seeing a trend brewing. The word “sourcing” or “sourced” is appearing on materials intended to be read by an organization’s customers.
For example, the window stickers on new vehicles often include a line item that lists the percentage of “domestically sourced content.” From a marketing perspective, the vehicle manufacturer wants to appeal to those who are proud to buy things that are “made in my country!”
Another example is a sign I saw in Starbucks recently. It described a three-prong approach to a social responsibility program they call “Shared Planet.” One of those three prongs was “Ethical Sourcing,” which described how their sourcing practices help farmers and the Earth’s climate. From a marketing perspective, Starbucks wants to appeal to those who consider environmental responsibility to be a priority.
Plenty of additional examples abound, from service companies that tout their supplier diversity and local sourcing programs to food companies that do away with gestation crates to treat the animals that become our food (sounds gross, but that’s reality) more humanely. We’ll never know if the decisions behind these sourcing practices are due to organizations’ leadership deciding that they are simply “the right things to do” or specifically to increase their appeal to customers but, regardless, these organizations are not shy about sharing the news about how they source.
Now, since its inception, strategic sourcing has always been associated with achieving the lowest total cost of ownership, not necessarily with achieving the most customer-appreciated reaction. But that’s changing. Strategic sourcing is becoming more, well, strategic!
So, that begs the question: are you sourcing in a way that your organization can use to its marketing advantage?
I’ll call this type of sourcing “principle-based sourcing.”
If not currently practicing principle-based sourcing, then you might be called upon to do so soon, so you should probably get started. But you have to know where to start.
Knowing what principles to base your sourcing activity upon requires that you understand what is important to your organizations’ customers. So, ask yourself (or, better yet, your CEO) questions like these:
- What is important to our customers?
- What sourcing-related activities could make us more attractive to our customers than our competitors?
- Are we willing to pay a premium for sourcing decisions that adhere to certain principles compared to those that do not? If so, how much of a premium?
- How can I begin principle-based sourcing? What do I have to change?
In conclusion, it appears that principle-based sourcing is an emerging – and, possibly soon will be, an exploding – practice. If this trend gains more momentum, principle-based sourcing won’t be a “nice to have” approach in your procurement arsenal. It will be a “must have” approach. The only question will be whether you will use principle-based sourcing to get a step ahead of the competition or in an attempt to catch up to a competitor that has already gained an advantage
Charles Dominick, SPSM, SPSM2 is the President and Chief Procurement Officer of Next Level Purchasing Association. For more information on Mr. Dominick or Next Level Purchasing Association, please visit NextLevelPurchasing.com.