The State of Strategic Sourcing 2014 – Part I

With the changing global landscape, the sourcing organizations are going through a paradigm shift.

Based on the latest research report by Ardent Partners on strategic sourcing, this blog series will focus on the various findings of the report.

While the pressure on the sourcing teams to drive greater savings has reduced, they are now expected to increase compliance and drive more innovation than ever before. When CPOs were asked to identify their top priority over the next three years, savings was identified by only four out of 10.

Take this for example; the average procurement department sources almost 40% more in 2014 than it did in 2007. In early 2009, nine out of every 10 Chief Procurement Officers (“CPOs”) were locked in on savings as an almost singular goal for their departments. Five years later, the number has fallen significantly, with only 52% of all procurement leaders in 2014 rating the need to identify more cost reductions and drive greater savings as a top business pressure.

Sourcing teams with myriad strategies, tools, and resources like eSourcing Software – iSource and spend analysis, are best positioned to extract greater value from their efforts when they align their systems and processes. But connecting the system and process dots only paints half the picture; sourcing teams also need the expertise to execute their projects and a level of enterprise engagement to ensure that they always work on the most important opportunities

Since most procurement teams and CPOs lack the centralized control to drive all sourcing and spending decisions, they feel the pressure to increase their overall influence within the enterprise, particularly as the expectations set for the procurement organization and CPO continue to rise. To that end, another 39% of all sourcing leaders feel the need to increase their overall effectiveness and influence within the enterprise, their second-most urgent business pressure in 2014

Stay with us as in the next blog, I’ll discuss the top strategies to improve sourcing performance and the challenges to sourcing success.