Part I. Sourcing strategic plans sometimes have too many guidelines and to little action

April 1st, 2009

Let’s stop all of the chatter about strategic sourcing in the retail vertical and start implementing specific short term tactics that can drive immediate results...

Let’s stop all of the chatter about strategic sourcing in the retail vertical and start implementing specific short term tactics that can drive immediate results…

A strategy is simply a plan of action designed to achieve a particular goal. In the case of strategic sourcing, the simple goal should be to buy the best product (quality) at the best price and labor optimization (total cost) from the best suppliers (standards).

A lot of conversation takes place on a regular basis in the procurement space relative to the number of manual processes that remain in place in the retail vertical relative to the RFX process. To be sure, this is true. It does not mean however that retail organizations do not have a strategy as to how they choose to source. For example, the goal of a company may be to improve net profits: the strategy chosen might be to undertake an advertising campaign; invest in a new computer system; or reduce costs in order to adjust consumer pricing.

This author does not believe that just automating the RFX and other procurement processes results in a strategic sourcing initiative that will be successful. Having a central repository for contracts, RFI’s, RFP’s and RFQ’s does not mean the tool will be used in its entirety or properly. In fact, more times than not companies revert to using their time honored processes and adjusting new tools to fit their comfort level.

Enter the specific tactic. Ah yes, the tactical plan that delivers the strategic plan. Not exactly. Tactics may describe specific actions taken for a specific area and can certainly be accomplished without a strategic sourcing plan in place.

Tomorrow we will review the specific tactic of developing new sources of supply

We look forward to and appreciate your comments.

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