Sourcing The Day After Tomorrow … Part I

Will not be anything like sourcing today. But, contrary to popular belief, it will NOT be accomplished by robots buying from robots to help your robots make your goods and deliver your services. (That will be the day after the day after the day after tomorrow. Which will be the day after the earth’s next massive extinction event when humanity will have to rely on robots to survive, for better or worse.)

To recap, this is sourcing today:

  • An organizational stakeholder (like Engineering) identifies a need for a non-catalog product or service and makes a request to Sourcing.
  • A buyer reviews the request and determines if a strategic sourcing event (negotiation, e-negotiation, etc.) needs to be conducted and a contract created or if it can be sent to Procurement for spot buy (and we are assuming it can’t, so)
  • The buyer conducts a detailed needs assessment
  • A strategic sourcing event format is conducted
  • Notifications / RFXs / Ts&Cs are sent out
  • Responses are analyzed
  • A preferred supplier is selected and negotiations begin
  • A contract is awarded

As part of this rather long and involved process there will be dozens of steps under the seven steps that sourcing does above. For example:

Review:

  • Product Requirements
  • Current Supply Base
  • Known Market Pricing
  • Alternative Options

Needs Assessment:

  • Detailed Use Case Review
  • Exploration of Alternative Options
  • Production Requirements
  • Support & Service Requirements

Strategy Selection:

  • Supply vs Demand Market Dynamics
  • Geographic Needs and Impediments
  • Known Supply Base Strength and Weaknesses
  • Required Speed

Communication:

  • Standard Protocols
  • Supplier e-Communication Capability
  • Level of Detail Required
  • Response timeframes

Analysis:

  • Market Pricing Data
  • Historical and Projected Spend
  • Cross-Category Materials Spend
  • TCO / TLC (Total Cost of Ownership, Total Lifecycle Costs)

Negotiations:

  • Format (online, offline, hybrid)
  • Fact Prep
  • Audit Trails
  • BATNA fallback

Contract:

  • Standard Terms and Conditions
  • Modification & Risk Mitigation to Supplier & Country
  • Key Metadata definition and obligation specification
  • Contract Analytics

And depending on the type of sourcing event, market dynamics, and complexity of the intended buy, under a current sourcing process supported by a current sourcing system, instead of dozens of steps, there could be hundreds. Is this really sourcing?

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