Saving money

How effective is your sourcing strategy?

For those of us deeply skilled in – and repeatedly executing – the end-to-end supply chain process (chevron representation, below), we know the procurement component of sourcing is critical. While the sourcing strategy of an enterprise sets the foundation and structure of purchasing, if the procurement processes are not performed, then why outline a strategy at all?

Strategic sourcing, according to the financial site BusinessDictionary.com, is a “method of managing procurement processes for an organization in which the procedures, methods, and sources are constantly re-evaluated to optimize value to the organization.” Ah, the procurement processes – there it is again. It’s critical, since it delivers value by optimally purchasing quality goods and services at price points intended to enhance profits for the business.

How well is your strategy working?

Perhaps your process has been expertly designed to drive efficiency and cost effectiveness.  It might even be superbly documented; with the intent to ensure those procuring against it implement the precise procedures and leverage pre-selected, strategic suppliers.

However, with over-worked and under-staffed operations departments, the savings, unfortunately, often fail to materialize. The goods are purchased. But has the right supplier been selected? Have paper invoices become overwhelming? Were the goods delivered and services even rendered, as stipulated in the contract? Has the invoice been properly matched to both the purchase order and the contract?

As it turns out, the best results are realized through a well-documented strategy and sound execution.

Several years ago, the Wharton School of the University of Pennsylvania published the article “Three Reasons Why Good Strategies Fail: Execution, Execution…” in which the author notes, “Plans are often simply agreed to and then forgotten.” Additionally, Wharton management professor Lawrence G. Hrebiniak, says, “MBA-trained managers know a lot about how to decide a plan and very little about how to carry it out.”

With so many benefits to be gained through effective execution, it’s good business to ensure procurement operations are contributing to the bottom line. Enterprises recognizing that procurement is not among their core competencies will often outsource these business processes to organizations with deep supply chain expertise.

At SDI, we believe effective partnering with a collaborative procurement outsourcing team provides a single consolidated entry point for all procure-to-pay operations. For over 20 years, we have been successfully delivering benefits to our clients.

We demonstrate efficiency via the reduced cost of processing purchase orders and invoices. Further productivity is gained through reduced cycle time to process these purchase order and invoices.

Cost effectiveness is swiftly expanded with accuracy of forecasts / analysis, compliance with corporate procurement policies and ensuring the optimal percent of spend is with contracted suppliers and under contracted terms.

SDI can not only execute your strategy, but we can also help you develop, and execute, from square one.