- 65% of procurement executives are open to innovation – pursuing game changing innovation or technology to support organization strategy.
- 88% of organizations cite strategic sourcing as ‘major’ or ‘critical’.
The above statistics, as per the recent Hackett Group research highlight the new and strategic role of sourcing in pursuing organizational goals, to be more process oriented rather than transaction oriented.
Today the sourcing execs not only focus on saving on cost but also on improving the process of supplier acquisition, managing supplier performance, managing resources at each stage of the sourcing project and at the same time ensure risk mitigation to gain maximum benefits out of the sourcing project.
The sourcing process has undergone a sea change today and thus the way these projects are managed. Let us look into some of the factors that mandate a re-look into one’s sourcing game plan.
- Volatile business environment
Fluctuating currency rates, labor charges, changing consumer preferences, competition in supplier market, product innovation etc. impact sourcing decisions demanding frequent changes in sourcing strategy.
- Global nature of supply chain
Supply chains are no longer limited to one country. To leverage the benefits offered by low cost economies, supply chains often extend across the globe. This means running sourcing projects at multiple locations to source goods/services from different parts of the world.
- Increasing scale of operation
As organizations grow, its scale of operation expands.This translates into increased requirement for raw materials/services and thus leading to more sourcing events.
- Aware and conscious consumers
Today the consumers demand to know the origins of the product and its impact on the environment. They expect better quality. Thus it is necessary for the organizations to keep a track of their sourcing projects throughout its life cycle.
- Going beyond cost reduction
Reducing cost is no longer the sole mission of procurement. It is expected to drive growth and innovation.
In the next blog post we will discuss how organizations can better manage their sourcing projects, taking the above factors in consideration. So stay tuned!!
For more information on Strategic Sourcing you can also view this video which talks about how businesses can create a competitive advantage with help of their supply chain and the strategic sourcing process. Click here to access the video.
