Get your group wide sourcing done

In the first instalment of our CPO challenge series, we touched upon the subject of assessing the value of purchasing transformation. This time, we will take a closer look at group wide sourcing and share some insight into how to succeed with your sourcing initiative.

Getting sourcing done on an enterprise level is usually easier said than done, and there are a number of reasons for this; the lack of sourcing competence; the lack of common processes; and the lack of enterprise wide tools to support the initiative. But there is also the change management aspect of the issue, typically regarding the buy-in from heads of business units or plant purchasing staff who generally do not want to hand over the power of supplier selection to corporate purchasing. Many local purchasers feel aversion to corporate wide initiatives because it strains their relationships with their suppliers – as the saying goes; it hurts when buds burst. Change does not just happen, it’s a process that has to be dealt with, and dealt with accordingly. The burden of transformation is also felt by many local suppliers who do not support enterprise wide initiatives as they see it as a threat to their business.

So how do you get your group wide sourcing done? Two words; focus and automate. It’s as simple as that.

Focus

Farzin Saber, Professional Services Manager, IBX Group

At IBX we’re strong believers in the central-led purchasing function. It’s a hybrid model that enables spend leverage, common enterprise-wide processes and best practice attributes of centralization with the local empowerment and specialization characteristic of the decentralized model. A recent study from Aberdeen Group demonstrated that organizations with center-led procurement considerably outperform their non-center-led counterparts in both spend under management and supply cost reductions achieved.

When it comes to group wide sourcing, a central-led purchasing organization enables the sourcing professionals to focus on what they should do best; ensuring supply at market prices. A central-led sourcing organization is better adapted to leverage competence and develop best practice processes. It also allows the organization to focus on change management and managing the internal resistance to change.

A central-led sourcing organization can get a better birds-eye view of a company’s spend, maintaining a better focus on critical and strategic materials on a group wide scale. It can also discover patterns in behaviour across the enterprise and design processes and strategies accordingly. Clear and formal processes give the organization a feeling of security and direction.

This approach can also enable sourcing organizations to outsource non-strategic categories, leaving no categories un-sourced and providing their organizations with market prices on all commodities.

In a centrally-led organization it is easier to drive change. At IBX we’ve developed a core-team approach that acts as the communicator, motivator and source of expertise. The core-team approach has proved very successful for transferring competence and increasing cross organizational learning.

IBX has also developed a set of professional sourcing services that off-load the purchasing function and accelerate eSourcing initiatives. The services allow buying organizations to focus their resources on strategic sourcing, with IBX taking care of the tedious and laborious set-up and supplier training.

Automate

Today, automated and e-enabled sourcing is the norm. eSourcing enables sourcing organizations to do more with less, sourcing from more suppliers, analyzing complex bids more accurately and compressing the sourcing cycle from weeks to days.

But even though eSourcing has become an industry standard, many sourcing programs still overlook support services. Therefore, IBX has developed a set of managed services that can accelerate eSourcing initiatives and enable the sourcing teams to focus on the core issues.

IBX Service Desk Source takes care of the tedious and laborious set-up and supplier training. The service is developed to accelerate the deployment and usage of eSourcing in the organization by offering a support function with high availability.

Measure what you accomplish and communicate your success

Succeeding with group wide sourcing is dependant on communication. Remember to communicate early success stories. This will get everyone on your side. And don’t forget to measure your results; benchmark against your peers, benchmark your strategic categories.

With top management buy in, the one common process – one sourcing tool approach is sure to gain cross business unit support, and as you start to communicate your success, more units will follow your lead and buy into the central-led purchasing process. There are large untapped potential in group wide sourcing; IBX has a deep competence in transforming purchasing.

IBX eSourcing Suite
The IBX eSourcing Suite is one the most comprehensive eSourcing solutions available on the market today. It provides sourcing professionals with support for all steps of the strategic sourcing process including program and supplier management, negotiations using RFX and eAuctions as well as analysis and optimization.

IBX eSourcing Suite empowers sourcing organizations to:

• Improve sourcing efficiencies and effects - one common process, central data, enterprise wide usage and core team deployment for greater effect. 
• Realize sustainable and recurring cost reductions, improving margins and generating bottom line results. 
• Optimize the supplier base - identify and balance the effects of transaction-based versus cooperation-based supplier relationships.