In our last post we noted that those of you following Spend Matters and Spend Matters EU will have noticed Nancy’s and Jason’s posts on the recent Trade Extensions events in London and Chicago on Managing Complexity. In these posts they made a number of interesting observations about the event and how it was different from many other customer-focussed vendor events. We summarized these in our last post and noted that while all of the differences identified were major differences between the Trade Extensions event and the average vendor event, the biggest difference was left unsaid.
The biggest difference was not in the event, or even in the unique approach Trade Extensions took in the planning and organization of the event, but in the viewpoint they took with regards to the core subject matter. The viewpoint, which is one that Sourcing Innovation has had for a long time, is simply thus:
It’s not optimization. It’s just sourcing.
It’s 2015. As indicated in a recent white paper by Mr. Smith on What Defines Complex Sourcing, Sourcing is Complex. In fact, as will be clarified in Sourcing Innovation’s upcoming paper on Complex Sourcing: Are You Ready, even the most basic of categories these days hide complexity well beyond an average Sourcing Professional’s wildest imagination. In fact, even a basic print tender can hide all nine dimensions of complexity and finding the right solution is in fact a sourcing problem of the highest magnitude. (The reality is that sourcing custom made controller boards is often easier.)
Sourcing involves identifying the plethora of options available, defining the cost model breakdowns, capturing all of the data, allowing suppliers to define their own proposals, capturing all of the buyer constraints and capacity restrictions, and creating various scenarios that represent different workable options. All of this requires an optimization platform.
The reality is that strategic sourcing requires a lot of analysis, and the only sourcing platform that can support the analysis required is one based on optimization. But it’s not necessarily about the optimization. Sometimes it’s about the requirements capture. Sometimes it’s about the data collection. Sometimes its about the modelling. Sometimes its just creating and costing scenarios. And sometimes, which could be a small fraction of the time, it’s about the optimization.
It’s not optimization, it’s strategic sourcing. You can’t do sourcing without optimization, even though you can do optimization without sourcing. That’s why the Trade Extensions event focussed on Sourcing. Whether or not the end of Procurement is nigh. How to effect change to keep it relevant. How to source responsibly. And what some best practices to achieve that goal are. If you can not strategically source, you cannot optimize. Don’t try to preach optimization before one understands the importance of true and proper strategic sourcing.
That’s also why Trade Extensions commissioned a book, The Strategic Sourcing Lifecycle: An Introduction, written by the doctor, which they will be giving away FREE as an e-Book download through their TESS Academy. (Stay tuned for more information on when this will be available.) It’s not optimization, it’s sourcing. And we’ve reached a point where most firms that claim to have Sourcing don’t.