Although a bit late to the game, I thought I would also chime in on the "Strategic Sourcing is Dead" buzz that is going around the blogosphere. For those that have not read it, Mpower wrote an opinion piece over at Sourcing Innovation. Since then, Procurement Leaders shared their opinion, Spend Matters shared theirs and our own Joe Payne shared his just a little bit ago. Author edit: here is another good one I just stumbled upon by Dave Henshall at Purchasing Practice.

As mentioned in Joe's post, the original post by Mpower was filled with so many buzzwords, abbreviates, acronyms and clichés that it was difficult to even understand the point they were attempting to make. However, after a couple of reads, I definitely disagree with their assumption that "Strategic Sourcing is Dead". What I do think is dead, is the ability to sell supply chain improvement projects, both as internal initiatives or hired-consulting firm initiatives, by selling buzzwords, massive reports, case studies and ego-based resumes on one's history of sitting in board rooms with the Big 5 consulting firms or not-so-well-known professors; strategizing about best practices, benchmarking or research reports.

I agree with their assumptions that strategic sourcing can often be about cost, however it is completely incorrect to say that a process rooted in cost can never be strategic. "Cost as a strategy, for the majority of organizations, is not, and has never been, a core strategy". Tell that to any number of the popular netbook manufacturers who do not innovate, they simply copy designs at a lower price. Read about Acer's rise to major manufacturing status; "And when it spots a hot trend started by another company — netbooks, for instance, were the brainchild of Asustek, a fellow Taiwanese company — Acer follows in force, bombarding the market with low-cost products".....     Take a look at Asus who is in the process of developing a lower-cost version tablet pc to compete with the iPad. Tell that to the car manufacturers that standardize internal parts across product lines and form partnerships with suppliers, tool and die makers, and material engineers to develop and test lower-cost/higher-strength materials. For many businesses, their supply chain and success of sales revolves directly around low-cost components. Each of these examples listed above all fall within Strategic Sourcing’s domain.

The original piece also said "Furthermore, cost reduction is not very high on the goal sheet of any of our major internal stakeholders". This is perhaps one of the most laughable statements that I have heard about the procurement industry as a whole. The last 5 years have been a renaissance in the procurement departments, moving from small departments that 'bought stuff' to entire teams that are embedded in the strategic direction of their companies, from engineering and design to marketing and sales to shipping product out the door and negotiating better financial terms. Here at Source One, we were recently engaged to assist in one, of many, internal diverse projects that took a mid-market company from $5 million in the red to $55 million in profit, in just two short years. Our collaborative piece of the sourcing projects produced $6 million in sustainable annual savings for the client, which translates to over 10% of their profits. It would be hard pressed to find any stakeholder or shareholder within that client that did not see our piece of the initiative as "high on the goal sheet".

Now, perhaps I am being a bit strong on the attack of this opinion piece. In fact, many of the concepts that are outlined are fairly solid. Companies do need to look at the stakeholder's stakeholders. They do need to think just beyond cost and build sustainable supply chains, and they do need to be prepared for the blips and bumps of supply disruption.

Mpower's follow up piece, The Sourcing Emperor Has No Clothes, continues down the same path of criticizing strategic sourcing and interjects new buzzwords such as "next practices" instead of "best practices". The second piece reiterates that, in their opinion, "Strategic Sourcing has always been fundamentally flawed". These statements again reaffirm my thoughts that the author is simply talking about improving existing processes, but is masquerading those thoughts behind buzzwords, round table discussions and slogans. There are no “next practices” as those practices should simply become the “best practices” if they produce valuable results. The Sourcing Process is only fundamentally flawed if you follow the original A.T. Kearny 7 Step Sourcing Process without adapting your own needs, skills and processes to each specific business requirement and spend category. The processes that are outlined in books and research reports are not one-size-fits all, and are simply a model for helping a company get started on developing process that work for their businesses.

It wasn't until I read this second piece that everything came together for me. These articles are nothing more than pure marketing pitches where the author is attempting to pitch their organization as a next-generation supplier of services. So I am in fact being a bit harsh, as we preach many of these same concepts at our firm, we just go about it in a different way. In fact, any successful professional services firm, or skilled internal Strategic Sourcing team is always redefining and improving their tools, resources, people, skills and processes. The difference is, they do not have a need to rebrand or create new labels for their job functions. Their stakeholders see the results through improved supply chain, supplier collaboration, and higher profit margins which means they do not need to waste their time sitting down and writing about “next practices” and 5, 7 or 11 step sourcing processes.

Strategic Sourcing is alive and kicking. The days of patting each other on the back, buzzwords, research reports without actionable conclusions, and expensive supply chain analysis reports in which the theory is never implemented, are dying.
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William Dorn

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  1. Catch Dalip's response to the debate...

    - Strategic Sourcing is Dead!!! (The Debate Rages On!) -

    - The Strategic Sourcing Debate, Part VI: Yup. It's still dead! - Sourcing Debate&sc=t&dt=3m&al=none