Daily Archives: August 7, 2007

Key Sourcing Trends Impacting Procurement

The European Leaders Network recently ran an interesting article entitled The Key Trends in Sourcing Impacting Procurement Today that summarized the key trends in the Sourcing Industry for 2007/8.

According to the author, the following market trends are currently impacting the way procurement professionals source goods and services.

  • Increased multi-sourcing
    Mega-deals are on the decline and niche players are on the rise. Value-add is slowly overtaking the ‘monolithic empire’.
  • Greater significance to governance
    The skills and disciplines associated with good governance are starting to be recognized as the key to sustainable relationships with their associated benefits.
  • Continued rise of global sourcing
    These days global sourcing is more a question of ‘when’ and ‘how much’ and not ‘if’. Even Europe is embracing the paradigm.
  • Consolidation in the IT supplier market
    There is significant consolidation occurring in the outsourcing space which should ultimately serve to benefit sourcing professionals.
  • Concentration on value
    Whereas the last few years have placed emphasis on short-term objectives in transaction execution, pushing sustainability onto the service provider, going forward, the trend is to concentrate on long-term value up-front and ensure that delivery will be metric-driven and focussed on the business needs in an effort to meet the overriding goals.

This is a good start, but it fails to mention the following trends that are also in play, as pointed out in Sourcing Innovation’s recent Sourcing 2007 and Sourcing Innovation cross-blog series. Consider the following:

  • On-Demand Software-as-a-Service Providers and (Enterprise) Open Source is changing the landscape
    Companies like Iasta and Procuri are driving down cost while driving up value.
  • M&A activity is also happening within the software provider space
    The latest example is the Cormine and Perfect Commerce announcement.
  • Sustainable Supply Strategies are becoming mainstream.
    Consider the recent Goldman Sachs report that found that companies implementing environmental, social, and governance (ESG) policies outperformed the general stock market by 25% over the last two years.
  • Raw material and commodity prices are skyrocketing across the board.
    The days of the constant Walmart rollback are over, especially if you are a minerals buyer.
  • The Talent Crunch is worsening by the day.
    Supply teams have no choice but to adopt best practices and do more with less.