http://bit.ly/1nBQfG7 The world in general (and business in particular) is getting more and more complex. Both private and public sector organisations are re-shaping by outsourcing, forming partnerships, collaborating in joint ventures and going back to the basics of what made them a success in the first place. Add to this increasing levels of expectation from customers in terms of the products and services they expect to receive, their quality and their price and you have a situation in which making a profit or keeping within budget is extremely difficult. What this means for the procurement community is that you can no longer (if you ever could) work in isolation from the rest of your organisation and the people it serves. Asking you to get price reductions every year is increasingly a futile task. What you need to achieve is a breakthrough in both supply costs and service if your organisation is going to continue to prosper. This needs a strategy for how you source things ... a strategy that has been developed and agreed by all the major players in the design, delivery and use of the goods and services you buy. This is how. http://academyforprocurementexcellence.com/sourcing-tips/

1. “It ain’t what you do,
It’s the way
that you do it,
That’s what gets results”
5 steps to effective, breakthrough sourcing strategies

2. The world in general (and business in particular) is getting more
and more complex. Both private and public sector organisations are
re-shaping by outsourcing, forming partnerships, collaborating in
joint ventures and going back to the basics of what made them a
success in the first place.
What you need to achieve is a breakthrough in both supply costs
and service if your organisation is going to continue to prosper.
This needs a strategy for how you source things ... a strategy that
has been developed and agreed by all the major players in the
design, delivery and use of the goods and services you buy.

3. Stage 1 : Discovery

4. The starting point is to decide how to define what you are sourcing.
By considering the capability that you are buying instead of the
narrow product or service definition.
The Business Requirements Definition sets out what the sourcing
strategy needs to deliver if all stakeholders are to be satisfied. It is a
structured description of what you need to source from supply
markets and covers the full range of stakeholder needs.
The second step in developing your sourcing strategy is to document
and understand your starting point. In other words:-
• what are you spending on these products and services?
• how does the price you pay compare to benchmarks?
• what makes up the cost of those products and services (and by inference, what
profit do your suppliers make)?
• what are the supply risks inherent in your current supply chains?
• how well do your current suppliers perform?

5. Stage 2 : Insights

6. In this step you look beyond the traditional evaluation of markets
and suppliers that tell you about products and services and their
costs and prices. Here we are looking at the capability of suppliers
to deliver your expectations.
In assessing supply market structure you look at the relative power
that the different parts of the supply chain have in any particular
situation – but with a specific focus on your power versus that of
your suppliers in your chosen market.
The starting point for supplier preferencing is to examine a supplier’s
assessment of you. A common technique that suppliers use for this
is the Boston Matrix.
A useful picture is that of your purchasing portfolio. This is made up
from a combination of your supply positioning and supplier
preferencing models.

7. Stage 3 : Strategise

8. Generating strategy options can be carried out with a peer group
using brainstorming techniques. Additionally, it is possible to
benchmark similar strategies from other organisations.
Hybrid strategies might also be developed by comparing features of
existing strategies and combing to form new strategies. When
carrying out comparison, you need to establish success criteria
(which usually are the business requirements).
The next step is to develop hypotheses for how you might address
the issues you have just identified. We test the hypotheses by
asking questions that we need answers to if we are to evaluate the
hypothesis as a viable option. If a hypotheses answers all or most
of the questions posed then it becomes an option for a sourcing
strategy.

9. Stage 4 : Construct

10. There are seven types of intervention you can consider:-
1. Market interventions: ways you can influence the market include
make versus buy strategies, supplier rationalisation programmes and
encouraging new entrants.
2. Technical interventions: these include rationalising or simplifying
specifications, innovative technologies and creating intellectual property
rights.
3. Cost structure interventions: Lean, Six Sigma, Total Cost of
Ownership, Value Analysis and Value Engineering.
4. Work process interventions: external, collaborative processes with
suppliers – such as joint planning.
5. Supplier relationship interventions: leveraging or changing your
relationship with suppliers to access capabilities
6. Supply chain interventions: design the right supply chain by either
eliminating unnecessary intermediaries or using outsourcing

11. Stage 5 : Optimise

12. Contract Management has a focus on a specific contract, is in the
“here and now” and is interested in making sure that the supplier
delivers to the contractual terms.
So, a contract will be let for a specific supplier (who may or may
not be part of the SRM programme) operating in a particular
category of supply market. The Contract Manager will work with
the supplier in monitoring performance and ensuring that the desired
outputs and outcomes of the contract are received.
Supplier relationship management is a continuous improvement
programme that works with individual key suppliers to drive out
innovation and improvements to service and cost

13. Get my free top tips booklet on how to create a sourcing strategy
by thinking differently to create a breakthrough in cost and quality
http://bit.ly/1nBQfG7