the doctor is always on the look-out for good articles on (strategic) sourcing and its importance to overall procurement performance in today’s stressful supply environment. Especially if the article isn’t yet another seven steps to sourcing success article. This article by Chris Eastham of fieldfisher was really close, as it provided nine tips to improve sourcing efficiency after telling you that
- Sourcing is a Live Wire
- Geo-Political Drivers cause Chaos
- Technological Drivers cause Complexity
and these collectively compound your struggles, which are exacerbated enough due to organizations taking approaches that don’t serve their overall strategic objectives such as:
- an insufficient focus on business drivers
- only seeking piecemeal advice from Legal
- a lack of project management (that results in key activities happening out of order)
- a lack of early stakeholder engagement
- an unsuitable project team (that doesn’t have the right subject matter experts)
And the author is dead on here. These are common mistakes. The author, as noted in our introduction, also had nine tips that included the following six:
- early engagement of all stakeholders
- realistic (not overly ambitious unrealistic) plans
- core team with (enough) subject matter experts from day one
- the desired results and a business case up front
- do multi-round tenders that include detailed RFIs
- define rules of engagement for stakeholders and vendors
But it was the following three that need to be highlighted because the doctor doesn’t see this advice enough in seven steps to successful sourcing articles.
- document all key requirements for the project in advance
- document all key product and service requirements, including any necessary terms and conditions that must be agreed to for the vendor to engage with the business
- get the right Legal team on board before the event is launched
Why are these three tips so tantamount to triumphant sourcing events?
- multiple reasons to document all key requirements for the project
- if you don’t document all key requirements, you can’t be sure you know them
- you can’t get the project right if you’re missing key requirements
- you need to make sure you don’t invite any vendors that can’t even meet the key requirements
- multiple reasons again to document all key product and service requirements
- if you don’t document all key requirements, will you buy the right product or service for you and, more importantly
- you can’t share all the key data with vendors, which is important to ensuring they quote on the right products or service and
- they can’t self select out if they can not meet any of your core business requirements, which means you could waste time analyzing their bids, optimizing the perfect award, only to start over when they figure out they’re not right for you (or, even worse, when they deliver the first order and nothing works)
- multiple reasons to get the right Legal team (which might just be one in-house counsel, or might be three hot-shots from an external firm for a complicated, 100M purchase that can make or break the company)
- they know the key requirements that need to be addressed and in the contract to minimize internal risks
- they know the risks of the dealing with companies in other geographies and what you have to consider for the suppliers you are planning to invite to the event
- they know what should be in the contract, and communicated as such up-front, what should be in an appendix, and what is not crucial
- they know the data you have to collect to meet the different regulatory (reporting) requirements that your organization has to adhere to, and which requirements you have to communicate with suppliers to make sure they can, and agree to, give you the right data
In other words, Legal, especially for any buy that is financially significant, strategically significant, or risky, is key to get involved in the right aspects up-front. (And note that if you build a team with the right stakeholders, and document the right requirements, Legal will be able to work quickly and efficiently, and even more so if you are willing to use standard templates and insist that vendors agree to your standard contracts and standard terms.)