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What's Holding You Back? 4 Sourcing Strategies for Success

Posted by Michelle Fombelle on Feb 13, 2014 8:00:00 AM

    
  • Struggling to get your sourcing program off the ground?
  • Sourcing program not as productive as you'd like?
  • Battling stakeholder resistance to e-sourcing?

cutting_costsMany businesses face these same internal procurement obstacles that hinder success, despite the fact that trimming costs is more important than ever. Improving margins and profitability are forefront initiatives this year because:

  • Retailers recently experienced a less than stellar holiday shopping season
  • Standard & Poor predicts less discretionary spending in 2014 due to rising healthcare costs and low retirement savings
  • Deloitte reported a six percent rise in the number of retailers going bankrupt

If the retail environment dictates fat trimming initiatives, then why do retailers still face internal obstacles when procurement has proven it's a good place to start? 

Buyer Resistance 

In many instances buyers are resistant to change and reluctant to abandon their tried and true process for negotiating. It is a battle for many organizations to change their buyers' perspective of the strategic sourcing process. Stakeholders will often resist e-sourcing over concerns that:

  • Reverse auctions will damage long-standing and carefully nurtured supplier relationships
  • Technology and outside experts cannot replace traditional procurement skills or experience
  • Strategic sourcing can't have a notable impact on greater business objectives
  • e-Sourcing won't be able to deliver savings without diminishing the quality or service levels

Understaffed

Many procurement teams lack the staff and resources required to successfully execute a sourcing transformation.

There are several strategies that sourcing leaders can employ to overcome these hurdles and get their organization fully committed to supply chain excellence.

1. Get the C-Suite Involved

Enlisting the help of the CEO or CFO can be a powerful and effective way to ensure that your procurement team is on board with e-sourcing. The c-suite sets the tone for the entire company – and it’s no different with procurement.

A CEO or CFO can ensure that buyers accept e-sourcing as a critical component of the procurement process by confirming and reaffirming – both publicly and privately – its importance to the overall goal of maximizing supply chain value, and continually articulating the company’s commitment to financial success.

By positively showcasing confidence in e-sourcing, the c-suite can help buyers overcome their doubts of the technology.

2. Empower Buyers

While the c-suite can set the overall tone, e-sourcing success ultimately depends on buyers being invested and dedicated to the process. Procurement managers can achieve this by clearly articulating what’s at stake for them – and the business itself.  

The best way to get buyers to buy-in is to celebrate sourcing success with employee recognition programs that reward buyers that hit particular goals – such as running the most sourcing events, or sourcing the highest amount of spend. By publicly recognizing the most successful savers, procurement managers can instill a positive and competitive team environment.

Additionally, managers can include e-sourcing metrics in buyers’ KPIs and annual goals. This ensures that buyers’ sourcing success will translate to their professional growth.

3. Provide the Tools to Succeed

Of course, once buyers are invested in supply chain transformation, procurement leaders will want to put them in the best position to succeed.

E-sourcing can enable retail buyers to make more informed procurement decisions by providing greater insight into a company’s spend – including the category volume, suppliers used, historical data, market trends, and more. With this insight, buyers can run more sourcing events, with more effective techniques – including combining vendors or sourcing multiple categories in a single event.

And with the help of outside sourcing experts, procurement managers and buyers can better understand when the best opportunities are to source specific categories, and ensure that events are run quickly and with the most effective strategy to yield the best possible results.

4. Driving Growth and Profitability

The key to a successful sourcing transformation is positivity and empowerment.  The company culture shift requires complete organizational participation, from the top down. It starts with the c-suite – but after that, procurement managers need to ensure that buyers are empowered and are rewarded and recognized for their success.

Even though procurement transformation can be daunting. Don't give up. Use these sourcing strategies to help gain enterprise-wide acceptance of strategic sourcing, and ultimately, success.

 

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