Everyone is busy! 2012 was a busy year. The first quarter of 2013 hasn't broken the trend; in fact, it seems that activity only continues to increase. Across the board, people are busy, particularly procurement and sourcing groups.

I'm not just making blanket statements to make people feel better about the long hours they've been putting in and the stress they've been dealing with lately. We actually are seeing the direct impact of the increased workload amongst our own staff. If you hadn’t heard, demand for our services are so strong that we recently outgrew our facilities. When I say everyone is busy, I base it on a new trend that we’ve seen in the last 24 months. That new trend is that everyone is asking for help.

Ten years ago, when I started with Source One, I maybe knew about 3 people outside of this company that had ever even heard the term "strategic sourcing" before. As you can imagine, selling a product that people had never heard of before was a challenge. Companies like ours spent time looking for that forward-thinking C-Level executive that "got it" and tried to convince them to push us down into the ranks of individuals controlling spend. That tactic almost universally met resistance. You've got the procurement and sourcing folks that were proud of the results they just negotiated, and felt threatened. You've got the process folks who wanted to tell you how the three-bid process them implemented saved millions, and there was no other way to do it. You had the marketing managers crying that we didn't understand advertising or media buying, the IT directors telling us that you couldn't improve pricing on products that had no competition in the marketplace, the shop floor managers telling us how only X brand filters would fit in their equipment, and the dozens of 20-year veterans that wanted no parts of someone that might ask any questions about how things had been done in the past. The list of complaints and excuses goes on and on.

Things slowly started to change. The term "strategic sourcing" started to become a bit more recognizable. In the mid-2000s, we saw more and more companies begin to adopt their own internal sourcing groups or processes. We saw more companies get focused on vendor relationships and understanding the total cost of a product or service purchase. But, many companies still thought sourcing was a "three bid and a buy", and across the board, most companies still felt challenged by anyone that suggested that there might be a better way of doing things.

Then the recession hit. Companies scrambled. People were let go. Departments, divisions, job functions and responsibilities all consolidated. Globally, companies cut spending, but often blindly, without a future vision.

Companies did what they needed to do to survive, but over time, they eventually started spending again. But beyond just spending, they started to also look at how and why they were spending. Even the companies that didn’t suffer in the recession started to become more aware of the way they handled purchases and procurement, and the way they chose their suppliers. Companies got smarter about sourcing and their overall supply chain. They started to find experts, whether in house or through services like Source One offers, and started to identify ways to reduce costs. Companies started to get serious about looking at how they spend. Companies began to move beyond the three-bid process. Companies began to realize that a software tool or an electronic catalog alone wasn’t going to produce the best-in-class results they needed. Executives started to mandate improvements in terms of hard dollar and soft dollar cost reduction, increases in service levels and improvements in payment terms.

That’s when things really started to get busy. Companies finally became aware of the internal goldmine of savings opportunities that existed and put the pressure on their teams to achieve it. However, it doesn’t always make sense to blindly throw staff into every spend category, nor did it make sense to hire internal staff experts for categories that may only get sourced once every three years.

So a major shift happened; “Strategic Sourcing” became a household term. Those same people that for the last ten years fought the very idea of a consultant involved in their spending now embraced it. I’d love to take credit and say that the book we wrote changed the industry’s perception of sourcing, but that wasn’t it. And it wasn’t purely the fact that executives started throwing challenging or sometimes unrealistic savings targets at department managers and expected them to perform… No, it was that the sourcing function finally started to earn the respect that it deserved for the last 20 years.

So it started to make sense now. Those individuals that fought tooth and nail to keep consultants out of their spend categories didn’t do it because they were lazy, inherently bad at their jobs, or were just waiting for retirement. They did it because they knew, that in almost every case, the work that they HAD been doing was not respected. They knew that the results produced in a collaborative engagement with a consultant would reflect poorly on them; because their own managers and colleagues didn’t understand what it was that they did every day. They knew that working with a consultant would pull them away from the dozens of other high priority projects they had going on, and they knew that would also reflect poorly on them.

But, things have finally changed. Procurement and Sourcing are becoming highly respected within their organization. The shift has been so drastic, that the stigma of working with a consultant has disappeared. In fact, the majority of the phone calls we receive are now coming directly from people that control spend, not from executives trying to force us down into their organizations. Spend managers have been tasked to do more with less. In this case, produce results, but don’t add payroll, and it has caused an absolutely boom in this niche consulting industry.

But the education of the strategic sourcing function still has a ways to go. Some companies are now just starting to understand that strategic sourcing is not just a cost-focused function. Bleeding-edge companies have already started to build out their own Shared Services groups, with sourcing teams playing a critical role. Those same companies are staffing their Shared Services teams with a combination of the right internal people, outsourced resources, tools and market intelligence – regardless of it they are home grown or outsourced. Interestingly, the companies that we see incorporating strategic sourcing into their culture are the companies that are strongly outperforming their competition. They realize strategic sourcing can serve a critical function in identifying the right products, services, partners and suppliers to align themselves with to ensure success. Further, by having the right individuals assisting with market research, sourcing, interviewing and selection of those solutions, they can free their own subject matters up to focus on the job functions that they are best performing. A properly formed Shared Services team takes the best skills from each stakeholder and ultimately delivers a result than no individual person or SME group could have achieved on their own.

While traditionally thought of as a procurement function, the evolution of Strategic Sourcing is a cross-functional team that can appropriately support and improve organizational business needs. It’s an exciting time in our industry now, because more and more companies are starting to “get it”, and those people within your companies that have been fighting for the last 20 years to get their heads above water are starting to finally earn the respect that they deserve.
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William Dorn

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