Stepping Up the Sourcing Game with Project Management
Stepping Up the Sourcing Game with Project Management As per the recent Hackett Group research, procurement executives are working to expand the quantity and quality of their organization’s spending influence via sourcing, category management and supplier relationship management. n 65% of procurement executives are open to innovation – pursuing game changing
innovation or technology to support organization strategy n 88% of organizations cite strategic sourcing as ‘major’ or ‘critical’
The above statistics highlight the new and strategic role of sourcing in pursuing organizational goals, to be more process oriented rather than transaction oriented. Although the primary objective of strategic sourcing is to save money, it is also important that the sourcing execs focus on improving the process of supplier acquisition, managing supplier performance, managing resources at each stage of the sourcing project and at the same time ensure risk mitigation. Keeping all these requirements in mind it is important that organizations give strategic sourcing projects its due importance. Large scale sourcing projects are complex and cannot be managed manually. A well planned project delivers the desired results within the defined scope, time and resources. Inefficient project plan would leave the organization adrift and result in loss of valuable resources. However, a plan is of no good if it is not implemented well.
So what can one do to step up the sourcing game? To reap benefits out of sourcing projects, organizations need to ensure astute management of these projects. Before we proceed with how organizations can effectively manage their sourcing projects, let us look into some of the driving forces that mandate a relook into one’s sourcing game plan. n
Volatile business environment - Fluctuating currency rates, labour charges, changing consumer preferences, competition in supplier market, product innovation etc. impact sourcing decisions. These demand for frequent changes in sourcing strategy when it comes to collaboration with internal and external stakeholders
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Increasing scale of operation - As organizations grow, its scale of operation expands. This translates into increased requirement for raw materials/services and thus leading to more sourcing events Ă˜
Intensive collaboration - Organizations today carry out an in-depth research before commencing a sourcing event. This generally involves – analysing the organization spend, need analysis – to determine and validate the need for product/raw material/service, external market analysis for understanding the current market value of the product/service being sourced and supplier market complexity. Carrying out such analysis and sharing the findings with concerned stakeholder demands high level of collaboration.
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Global nature of supply chain - Supply chains are no longer limited to one country. To leverage the benefits offered by low cost economies, supply chains often extend across the globe. This means running sourcing projects at multiple locations to source goods/services from different parts of the world
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Aware and conscious consumers - Today the consumers demand to know the origins of the product and its impact on the environment. They expect better quality. Additionally, consumers are spoilt for choices. In an era of cut throat competition, organizations are always improvising on their products/services. There is a fight between organizations to serve consumers faster and better. Organizations need to maintain their competitive streak across the entire value chain. Thus it is necessary for the organizations to keep a track of their sourcing projects throughout its life cycle
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Going beyond cost reduction - Reducing cost is no longer the sole mission of procurement. It is expected to drive growth and innovation. Suppliers are no longer viewed as vendors. Organizations seek to constantly enhance their relationship with suppliers
Leveraging technology will help sourcing managers run projects with increased effectiveness and achieve quality results. There are multiple tools that can be used to manage sourcing projects. For instance, spreadsheets, Gantt chart other and collaborative tools.
These individual or collaborative tools have limited capabilities and are suitable for a small group of individuals and for individual projects. It would be very difficult for a CPO to get a holistic overview into all the sourcing projects within the organization using these tools. Organizations with large scale sourcing require tools that can provide a holistic view into the myriad of sourcing projects running throughout the organization and, are accessible by different sourcing project managers and other top level executives.
Flexibility – as mentioned earlier, organizations are operating in a volatile business environment. The tool should be flexible to support changing business requirements
Better visibility to top executives – what would interest a CPO is getting information of all the sourcing projects, their status on a single page with graphical representation
What to expect from sourcing project management?
Integration with other systems – it should be easily integrated with ERP systems or any other procurement tools used by the organization
Scalability – it should not be limited by the no. of projects the tool can support. Large organizations have multiple projects running simultaneously and the tool should be able to support this
Higher adoption rate – the tool should have user friendly interface like retail commerce websites like amazon.com. Thus resulting in higher adoption rate
How does sourcing project management work?
Create template
Assign category to the template. E.g. laptops, spare parts etc.
Add methodology used to manage the project
Create project – for instance, sourcing automobile spare parts
Add project details using a previously created template
Define Scope of Work
Add project phases
Assign stakeholders – approver, reviewer, task
Track project status
What are the benefits of using an integrated sourcing project management tool? n
Better visibility - The dynamic graphical representation of sourcing projects and reports provides the sourcing manager and the CPO with a bird’s eye view into the project status, highlighting bottlenecks, if any for every sourcing project that is active
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Better compliance - Project management enables the sourcing manager/CPO to assign stakeholders for various tasks within the project, define timeline for various tasks and set overall savings target for the project. In case there has been a delay at any stage it gets highlighted immediately and corrective measures can be taken by the sourcing manager. The project thus has accountability and better compliance
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Structured process - The sourcing project has set tasks with stakeholder assigned. Any bottlenecks can be traced to the task owner and actions can be taken immediately. This ensures every project follows a more structured process
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Improved efficiency - Structured process, accountability and ability to take preventive measures improve the efficiency and performance of the sourcing project
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Capturing knowledge - Having a knowledge section or repository where sourcing managers, CPOs can store tricks of the trade or tips or any other resource. This can help form a repository of sourcing knowledge including some practical scenarios that can come handy while executing sourcing projects
Conclusion In times when the sourcing game is constantly changing, procurement execs need to frequently evolve their game plan to stay ahead of their competitors. A well planned and well executed sourcing project contributes to the organizational success. It helps sourcing managers/CPOs to take timely actionable decisions with better visibility into the project status. It not only helps in cutting down on cost but helps drive value by delivering quality output that contributes to the organization’s overall profitability and reputation.
Z About Zycus
At Zycus we are 100% dedicated to positioning procurement at the heart of business performance. For more than a decade we have been the world's most trusted leader in Spend Analysis. With our spirit of innovation and a passion to help procurement create even greater business advantages, we have evolved our portfolio to a full suite of Procurement Performance Solutions — Spend Analysis, e-Sourcing, Contract Management, Supplier Management, and Financial Savings Management. Behind every Zycus solution stands an organization that possesses deep, detailed procurement expertise and a sharp focus on being responsive to customers. We are a large — 600+ and growing — company with a physical presence in virtually every major region of the globe. We see each customer as a partner in innovation and no client is too small to deserve our attention. With more than 200 solution deployments among Global 1000 clients, we search the world continually for procurement practices proven to drive competitive business performance. We incorporate these practices into easy-to-use solutions that give procurement teams the power to get moving quickly — from any point of departure — and to continue innovating and pushing business and procurement performance to new heights.
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