Whether implementing the results of a procurement transformation initiative or simply taking steps in better managing your indirect spend, creating a sourcing roadmap involves strategic planning to ensure that sustainable change management is a possibility. Once momentum is flowing amongst stakeholders, it may seem beneficial to start sourcing as much as possible as soon as possible to begin to realize savings, however, this can lead to timing challenges, project cancellation, and overall loss of engagement as the project approaches implementation. There are a few key steps to consider while planning an initial roadmap.
It is not uncommon for projects to be on track and successful, and suddenly lose momentum during implementation. A key consideration when planning the timeline of projects with overlapping stakeholder teams is the resources that will be needed for implementation. For example, while conducting an initiative for custom corrugated packaging and a separate initiative for pallets at the same time may seem like it could possibly open some synergies or keep stakeholders engaged, it may become problematic to implement both under a similar time frame. Testing periods for each will require close monitoring of the overall packaging and shipment process and if product failure occurs, it will be difficult to isolate the supplier responsible. As a result, buyers may prefer to go back to their original incumbent, resulting in a loss of savings that may have been able to be better managed under stakeholders with more capacity.2. When does contract expiration align?
Contract expiration also needs to be tracked and aligned before planning sourcing engagements. If multiple suppliers exist within the same category, consolidation opportunity may not be possible until all expiration dates fall under a similar time frame. This is especially critical if there are significant penalties for cancellation. The best way to ensure this is to negotiate a month to month auto-renewal for expired agreements to hold pricing and the supplier relationship while scoping the project.
3. Are there synergies within other projects?
Diametric to point number one, it is also important to consider if there are synergies in sourcing two projects simultaneously that outweigh any implementation risks. For example, Fire Protection Services and Uniform Purchases have overlapping supply bases, while FPS typically falls under a facilities management stakeholder group and Uniform Purchases under MRO/HR. These could be done in tandem to leverage the full volume with suppliers who can support both without risking stakeholder resource exhaustion during implementation.
4. Is transition feasible?
Occasionally suppliers are so ingrained into the operations of the business, the feasibility of a transition would not be possible without high risk or high cost. In these instances, developing a strategy that supports a direct negotiation with an incumbent is important to not waste resources on a plan that cannot be executed. Additionally, once this assessment has been made, steps should be made to undergo knowledge transfer from the supplier to the organization so that in the future, there is a better opportunity for a supplier change in the category, encouraging competition.It is critical that project timing is planned beyond savings identification through implementation. Having a change management team that contains stakeholders, executive support, and an implementation manager is necessary to truly realize the complete benefits of the strategic sourcing process. Keeping these items in mind will set you up for an optimal sourcing event from start to finish.