According to a recent brief from Aberdeen, at least when it comes to Direct Materials Sourcing, we are all Living in a Material World. The rest of us have known this since 1984 … so what’s the word?
Well, they are currently working on a Direct Materials Sourcing Study (and interested enterprises can take the survey. It seems that even though previous research found that over half of the enterprises indicated that an automated and standardized company-wide direct materials sourcing process is required, only 17% of enterprises have achieved such a level of standardization.
Aberdeen’s current hypothesis is that effective direct materials sourcing should include the following business processes:
- Standardized Strategic Sourcing Initiatives Company Wide
- Cross-Functional Procurement Teams
- E-Sourcing and E-Procurement Solutions
- Procurement Involvement in Product Development
- Leverage of Outsourcing
And I have to agree. It also posits that Low-Cost Country Sourcing (LCCS) is a key strategy for effective direct materials sourcing. Here I have to disagree. I could be persuaded to accept Best-Cost Country Sourcing (BCCS), but since there are risks and disadvantages to low-cost country sourcing, and since some low-cost countries are not all that low cost, I believe a more objective, well-rounded total cost of ownership vs. value calculation is required.
Still, it will be interesting to see what they find out.