Project And It’s Impact On Sourcing Success

Project And It’s Impact On Sourcing Success

February 26, 2015 0 By Aval Sethi

The last three of our nine major barriers to success fall under the project umbrella. Though bad data is generic to all business processes, it has drastic consequences on the sourcing process.

Meaningful Spend

From a project perspective, having a spend, that is not meaningful means that the supply base is not interested in the business. It may mean that:

  • The dollar value of the potential business is too small to be interesting to suppliers
  • The quality standards are overly stringent and too costly to support over the contract duration
  • The bidding and qualification process is too cumbersome and costly to warrant supplier participation.

Sometimes spend is meaningful not because of the overall value, but because the supplier wants to have a recognizable reference customer or the supplier needs to utilize excess capacity.

Bad Data

It is important to build sourcing projects with current, detailed and accurate data so that suppliers can provide correct quotes. Data must be correct and complete before making major buy decisions or sourcing teams run the risk of making costly mistakes. Examples of bad data include:

  • Out of date specifications and drawings
  • Incomplete specifications and drawings
  • Supplier owned specifications (where only one supplier can fulfill requirements) Inconsistently distributed data where not all suppliers receive the same information bundles

Limited Use of E-Sourcing Tools

Strategic sourcing is a complex and involved process. Previously, sourcing professionals relied on traditional paper RFQs/RFIs/RFPs, spreadsheet-based project management, checklists, conferences calls, face-to-face meetings and email/fax communication and distribution methods. With today’s fast-paced, global economy, sourcing professionals need access to tools that are equally fast-paced and globally accessible. E-sourcing tools should enhance communication and improve access to information. E-sourcing tools should not replace communication or relationships. Failure to use today’s e-sourcing tools results in longer, more expensive sourcing projects with reduced delivered-value. It is important to note that e Sourcing does not equal auctions. Not all sourcing projects should use auctions, but many can.

Aval Sethi