While it's possible to introduce important new supply chain concepts in vague or high-level terms, truly seeing the value generated by those approaches is far more likely to sway decision-makers and get their attention. Real companies saving real money is a clear window into the relative usefulness of modern procurement and sourcing methods.
When managers let their supply chain strategies lapse into familiar patterns, they may end up missing out on a significant amount of value. Strategic sourcing's real potential lies in its ability to shake up these calcified processes and deliver an alternative approach to processes that many industry leaders don't think about often, such as contract management.
Sprint's new approach
According to Supply Chain Digital, some of telecommunications giant Sprint's turnaround in recent years has been attributable to its embrace of improved procurement processes. When new Chief Procurement Officer Mariano Legaz took over in April 2016, he delivered a value-centric approach to sourcing. This began with the implementation of metrics. Now, the impact of each project and contract is clear. This data has become valuable when signing deals with new suppliers.
Companies that simply regard procurement as a formality are missing out on the kinds of savings Sprint has been unlocking with its focused take on cost-cutting. Supply Chain Digital added that Legaz and his department have managed this improvement while staying closely connected to other departments. Rather than becoming a monolithic or disconnected silo, procurement acts as a savvy partner for other sections.
With procurement embedded in corporate decision-making and equipped with better analysis tools than in the past, the telecom company has cut its operating expenses significantly. When companies start to see sourcing as a strategic matter, they can begin to pursue these savings. If they don't make this mental leap, however, leaders may continue on without considering processes they could be improving.
Reading a success story such as Sprint's may give the impression that there are two versions of procurement - the old, short-term view and the newer, more strategic approach. However, when ambitious experts look at today's strategic sourcing, they consider where things can go next. Spend Matters contributor Carina Kuhl stated that a world with analytics use and long-tail spend management still has room for improvement. For instance, companies can pursue new and more flexible approaches to the supplier contracts they sign.
Using automation and software to use contracts as living documents, and to work with partners over time, could be a new frontier for value and savings in the procurement world. Its easy to see how introducing more flexibility into relationships that have traditionally been static could create new opportunities for sourcing departments. Furthermore, this added oversight is an interesting new way to boost procurement's usefulness over time.
Dollars adding up
Companies are interested in figuring out areas of their operations where there is money to be saved. Convincing C-suite leaders that procurement is one such department could be the key to implementing new, strategic approaches. The ideas pursued by Sprint show that these kinds of savings are within reach, and Kuhl's thoughts on contracts show that there are next steps.