On the first day of X-Mas
my blogger gave to me
a lesson in strategy.
Everything should be strategically sourced.
As I’ve indicated before, this does not mean that you should apply an intense multi-stage strategic sourcing effort on everything you buy, just that you should have a strategy for dealing with every category – since that’s the key to success across the board.
Where do you start? One method would be to create a nine-cell grid that divided your purchases into direct goods, outsourced services, and indirect / MRO along one axis and strategic, non-strategic but custom / non-commodity, and commodity along the other axis and then assign a default strategy for each grid cell.
|Direct||Outsourced Services||Indirect / MRO|
|Strategic||Collaboration with a small set of strategic suppliers||Dedicated Contract Owner||Collaboration with a best-in class provider for each category of services|
|Custom||Decision Optimization on a Pre-Qualified Set of Suppliers||Managed by a Strategic Outsourcing Provider||Managed by a Senior Sourcing Professional|
|Commodity||Reverse Auction||Multi-Stage RFX||Lowest Bid|
Another method would be the one described in Detail in Next Level Purchasing‘s course Savings Strategy Development that I reviewed last week in Part I and Part II. At a high level, NLP recommends segregating opportunities into quick hit opportunities (which can generally be executed rapidly using best-practiced based eSourcing tools), supplier relationship / collaboration opportunities, and strategic sourcing opportunities, which can be attacked using NLP’s 10 phase approach to world class sourcing. The course is worth it for the details on these segmentation and detailed sourcing methodologies alone. ( Maybe I should be asking for referral fees. )
I’m personally not sure what the best methodology for you is, but what I have personally found is that the existence of a methodology is sometimes much more important than the actual methodology itself – and that the best methodology is usually one based on a best-practice methodology that has worked well for others, tweaked to your own needs. So if you don’t have a methodology and a coherent across-the-board strategy for your procurement organization – get one, it will enable more success than any tool ever will – since it will tell you where to apply the tool for maximum return.
And yes, I know the Christian twelve days of Christmas traditionally start on Christmas day, but this is the twelve days of X-Mas. Moreover, do you really want to be reading a series of posts that start on Christmas Day?