Stepping Up the Sourcing Game with Project Management

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Stepping Up the Sourcing Game with Project
Management
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Stepping Up the Sourcing Game with Project
Management As per the recent Hackett Group
research, procurement executives are working to
expand the quantity and quality of their
organizations spending influence via sourcing,
category management and supplier relationship
management. n 65 of procurement executives
are open to innovation pursuing game changing
innovation or technology to support organization
strategy n 88 of organizations cite strategic
sourcing as major or critical The above
statistics highlight the new and strategic role
of sourcing in pursuing organizational goals, to
be more process oriented rather than transaction
oriented. Although the primary objective of
strategic sourcing is to save money, it is also
important that the sourcing execs focus on
improving the process of supplier acquisition,
managing supplier performance, managing resources
at each stage of the sourcing project and at the
same time ensure risk mitigation. Keeping all
these requirements in mind it is important that
organizations give strategic sourcing projects
its due importance. Large scale sourcing
projects are complex and cannot be managed
manually. A well planned project delivers the
desired results within the defined scope, time
and resources. Inefficient project plan would
leave the organization adrift and result in loss
of valuable resources. However, a plan is of no
good if it is not implemented well. So what can
one do to step up the sourcing game? To reap
benefits out of sourcing projects, organizations
need to ensure astute management of these
projects. Before we proceed with how
organizations can effectively manage their
sourcing projects, let us look into some of the
driving forces that mandate a relook into ones
sourcing game plan. n Volatile business
environment - Fluctuating currency rates, labor
charges, changing consumer preferences,
competition in supplier market, product
innovation etc. impact sourcing decisions. These
demand for frequent changes in sourcing strategy
when it comes to collaboration with internal and
external stakeholders
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• n Increasing scale of operation - As
  organizations grow, its scale of operation
  expands.
• This translates into increased requirement for
  raw materials/services and thus leading to more
  sourcing events
• Intensive collaboration - Organizations today
  carry out an in-depth research before commencing
  a sourcing event. This generally involves
  analysing the organization spend, need analysis
  to determine and validate the need for
  product/raw material/service, external market
  analysis for understanding the current market
  value of the product/service being sourced and
  supplier market complexity. Carrying out such
  analysis and sharing the findings with concerned
  stakeholder demands high level of collaboration.
• n Global nature of supply chain - Supply chains
  are no longer limited to one country. To leverage
  the benefits offered by low cost economies,
  supply chains often extend across the globe. This
  means running sourcing projects at multiple
  locations to source goods/services from different
  parts of the world
• n Aware and conscious consumers - Today the
  consumers demand to know the origins of the
  product and its impact on the environment. They
  expect better quality. Additionally, consumers
  are spoilt for choices. In an era of cut throat
  competition, organizations are always improvising
  on their products/services. There is a fight
  between organizations to serve consumers faster
  and better. Organizations need to maintain their
  competitive streak across the entire value chain.
  Thus it is necessary for the organizations to
  keep a track of their sourcing projects
  throughout its life cycle
• n Going beyond cost reduction - Reducing cost
  is no longer the sole mission of procurement. It
  is expected to drive growth and innovation.
  Suppliers are no longer viewed as vendors.
  Organizations seek to constantly enhance their
  relationship with suppliers
• Leveraging technology will help sourcing managers
  run projects with increased effectiveness and
  achieve quality results. There are multiple tools
  that can be used to manage sourcing projects. For
  instance, spreadsheets, Gantt chart and other
  collaborative tools.

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These individual or collaborative tools have
limited capabilities and are suitable for a small
group of individuals and for individual projects.
It would be very difficult for a CPO to get a
holistic overview into all the sourcing projects
within the organization using these
tools. Organizations with large scale sourcing
require tools that can provide a holistic view
into the myriad of sourcing projects running
throughout the organization and, are accessible
by different sourcing project managers and other
top level executives.
Flexibility as mentioned earlier, organizations
are operating in a volatile business environment.
The tool should be flexible to support changing
business requirements
Scalability it should not be limited by the no.
of projects the tool can support. Large
organizations have multiple projects running
simultaneously and the tool should be able to
support this
Better visibility to top executives what would
interest a CPO is getting information of all the
sourcing projects, their status on a single
page with graphical representation
What to expect from sourcing project management?
Higher adoption rate the tool should have
user friendly interface like retail commerce
websites like amazon.com. Thus resulting in
higher adoption rate
Integration with other systems it should be
easily integrated with ERP systems or any other
procurement tools used by the organization
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How does sourcing project management work?
Assign category to the template. E.g. laptops,
spare parts etc.
Add methodology used to manage the project
Create template
Add project details using a previously created
template
Create project for instance, sourcing
automobile spare parts
Define Scope of Work
Assign stakeholders approver, reviewer, task
owner
Track project status
Add project phases
What are the benefits of using an integrated
sourcing project management tool? n Better
visibility - The dynamic graphical representation
of sourcing projects and reports provides the
sourcing manager and the CPO with a birds eye
view into the project status, highlighting
bottlenecks, if any for every sourcing project
that is active n Better compliance - Project
management enables the sourcing manager/CPO to
assign stakeholders for various tasks within the
project, define timeline for various tasks and
set overall savings target for the project. In
case there has been a delay at any stage it gets
highlighted immediately and corrective measures
can be taken by the sourcing manager. The project
thus has accountability and better compliance
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n Structured process - The sourcing project has
set tasks with stakeholder assigned. Any
bottlenecks can be traced to the task owner and
actions can be taken immediately. This ensures
every project follows a more structured
process n Improved efficiency - Structured
process, accountability and ability to take
preventive measures improve the efficiency and
performance of the sourcing project n
Capturing knowledge - Having a knowledge section
or repository where sourcing managers, CPOs can
store tricks of the trade or tips or any other
resource. This can help form a repository of
sourcing knowledge including some practical
scenarios that can come handy while executing
sourcing projects Conclusion In times when the
sourcing game is constantly changing, procurement
execs need to frequently evolve their game plan
to stay ahead of their competitors. A well
planned and well executed sourcing project
contributes to the organizational success. It
helps sourcing managers/CPOs to take timely
actionable decisions with better visibility into
the project status. It not only helps in cutting
down on cost but helps drive value by delivering
quality output that contributes to the
organizations overall profitability and
reputation.
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At Zycus we are 100 dedicated to
positioning procurement at the heart of business
performance. For more than a decade we have
been the world's most trusted leader in
Spend Analysis. With our spirit of
innovation and a passion to help
procurement create even greater business
advantages, we have evolved our portfolio to a
full suite of Procurement Performance
Solutions Spend Analysis, e-Sourcing,
Contract Management, Supplier Management,
and Financial Savings Management.
Z
About Zycus
Behind every Zycus solution stands an
organization that possesses deep, detailed
procurement expertise and a sharp focus on
being responsive to customers. We are a large
600 and growing company with a physical
presence in virtually every major region of the
globe. We see each customer as a partner in
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we search the world continually for
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incorporate these practices into easy-to-use
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