Stepping Up theSourcing Game with Project Management

Stepping Up the Sourcing Game with Project

Management

n

n

So what can one do to step up the sourcing game?

let us look into some of the driving forces that

mandate a relook into one’s sourcing game plan.

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.

65% of procurement executives are open to innovation – pursuing game changing

innovation or technology to support organization strategy

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.

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,

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

n Volatile business environment -

n

Ø

n

n

n

Increasing scale of operation -

Intensive collaboration -

Global nature of supply chain -

Aware and conscious consumers -

Going beyond cost reduction -

As organizations grow, its scale of operation expands.

This translates into increased requirement for raw materials/services and thus

leading to more sourcing events

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.

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

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

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.

Flexibility – as mentioned earlier, organizations are operating in a volatile business environment. The tool should be flexible to support changing business

requirements

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

Integration with other systems – it should be easily

integrated with ERP systems or any other procurement tools

used by the organization

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?

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.

What are the benefits of using an integrated sourcing project

management tool?

n

n

Better visibility -

Better compliance -

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

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

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

How does sourcing project management work?

n

n

n

Structured process -

Improved efficiency -

Capturing knowledge -

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

Structured process, accountability and ability to take

preventive measures improve the efficiency and performance of the sourcing

project

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

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.

Conclusion

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.

Z

AboutZycus

Princeton: 103, Carnegie Center Suite 201, Princeton, NJ 08540 Ph: 609-799-5664

Chicago: 5600 N.River Road; Suite 800, Rosemont, 1L 60018. Ph: 847-993-3180

Atlanta: 555 North Point Center East; 4th Floor, Alpharetta, GA 30022. Ph: 678-366-5000

NORTHAMERICA

London: Office 404, 4th floor, Albany House, 324/326 Regent Street, London, W1B3HH.

Ph : +44 (0)800 6226561

EUROPE

ASIA Mumbai: Plot No. GJ – 07, Seepz++, Seepz SEZ, Andheri (East), Mumbai, Maharashtra 400 096 Ph: +91-22-66407676