… is something every single organization that relies on direct sourcing needs, but something that few organizations have.
Not only do most organizations not have the right system for direct sourcing (relying on first generation e-Sourcing systems designed for indirect sourcing), but they have no idea how to do value-based sourcing. With an undue focus on unit cost, transportation cost, and delivery dates, most organizations don’t realize that success requires good direct category management, which requires more than just cost transparency.
Successful direct sourcing also requires risk transparency and good supplier management, as quality and performance are as, if not more, important than cost in direct sourcing. Think about it. If the component being sourced is poor and breaks down rapidly, then the product breaks down rapidly. If the product breaks down rapidly, while still under warranty, that’s not just a huge cost to the organization, but also a huge hit to the brand. Not good at all.
But direct sourcing is more than just focussing on supplier demo product quality, or overall supplier performance, it’s focussing on the big picture. What is the big picture?
For deep insight, download Sourcing Innovation’s latest white paper on Value-Based Sourcing in Complex Direct Supply Chains, sponsored by Pool4Tool. In this white paper we discuss the six value levers that allow you to get more out of your direct categories when sourcing, with a deep discussion on quality and performance and risk management, which give you a fuller view of the category than you will get focussing on costs and supplier scorecards alone.