Revisiting Your Organization's Strategic Sourcing | GEP Blog

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Is Your Organization Really Engaged in Strategic Sourcing?

Is Your Organization Really Engaged in Strategic Sourcing?

The concept of strategic sourcing is not new. Most large, sophisticated organizations have been though strategic sourcing before and most that I’ve observed would say that their procurement organization is actively engaged in “Strategic Sourcing.”  According to Aberdeen’s The State of Strategic Sourcing only 5% of organizations perceive strategic sourcing as a low value function, so it comes as no surprise that most procurement organizations would like to be actively engaged in it. While the term “strategic sourcing” is frequently thrown around, the reality is that there are many stages of sourcing acumen. 

Unfortunately, many organizations call something “strategic sourcing” that is really more tactical or transactional.

What’s behind the strategic sourcing status quo?

As strategic sourcing has moved from a new and innovative idea to a standard business process at many large organizations, the process has frequently become watered down. Whether due to a misguided sense of what strategic sourcing truly is, complacency, or a lack of resources to fully execute effectively, many organizations are fooling themselves into thinking that they are conducting strategic sourcing when they are not.

Strategic sourcing is not…

It can be easy for a procurement organization to fall into the trap of thinking that they are conducting strategic sourcing because they: issue a RFP every few years, conduct reverse auctions every quarter, or try to consolidate the number of suppliers in a given category. While these activities can certainly provide savings by themselves they do not constitute strategic sourcing. In my next post I’ll discuss 4 basic questions that can help senior procurement managers identify if their organization is really undertaking strategic sourcing. 

Until then, tell us how your organization evaluates if it is really engaged in strategic sourcing.

GEP believes in holistic strategic sourcing approach that delivers realized, bottom-line savings and creates a competitive advantage. Learn more about GEP’s approach to strategic sourcing.

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I agree with your blog. In fact I read an article saying that if strategic sourcing is done properly it can lead to reductions in spending from 15-25% of MRO materials.

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