Puls Solutions

Sourcing organization: how to build and retain a high performing organization of buyers

Blogginlägg   •   Okt 02, 2012 09:57 CEST

Sufficient organization of buyers

The role of a sourcing professional is very complexand the sourcing professional should be able to adapt and understand different roles in a company and be able to build relationships and cooperate with several functions. A high performing sourcing organization has significant impact on a company’s results:

·         Revenue increase – introduction of supplier innovations, secure supply and improve the service levels and capabilities of suppliers to enhance the attractiveness of the offering to existing and potential customers

·         Cost reduction – secure the lowest possible total cost as well as streamlining the internal purchasing process and having efficient access to purchasing information

·          Invested capital reduction – optimizing working capital levels (e.g. inventory, account payables) by implementing favourable delivery solutions and other contractual terms and conditions as well as securing an efficient management of the CAPEX process

Sourcing has during the last 10-15 years developed from an administrative function, placing orders, shipment follow up etc. to a much more strategic role. Global companies are driving complex supply chains with many stakeholders and short product life cycles limits the ability to identify and develop new suppliers as well as work with value engineering and process optimizations.  Focus on core competence in many departments drives sourcing to be a bridging function as well as we need to have a broad understanding of many areas

In order to continuously improve the company’s result with help from the sourcing organization it is important to have a sufficient organization of buyers that continuously performs. In order to do so every company should consider the following areas:

1.       Create awareness: Inform and communicate the sourcing function’s impact on the overall financial performance of the company the whole company will understand the true value of the sourcing function. Normally sourcing is a big contributor to a positive financial result, meaning the awareness will attract the best employees as well as empowering the sourcing organisation internally in different forums.

2.       Attract and retain talents: Offer attractive compensation packages including significant performance based bonuses, interesting and challenging work tasks and a solid career plan.

3.       Nurture talents: Offer tailored training and competence development programs to the people in the sourcing organization.  Expose the talents to new challenges (e.g. working with new commodities or taking on different roles) to improve skills and secure personal development

4.       Drive bold people management: Make sure to get the right people working in the sourcing organization and get the wrong people out of the organisation unless they can or will improve


Common pitfalls

-          The sourcing organization is seen as an administrative order placing function and the strategic potential of an efficient sourcing organization is not used. This means loss of value opportunities

-          There are limited investments in competence development of the sourcing organization. Competence development programs helps the sourcing professionals to train and continuously improve their skills

-          The sourcing organizations value is not measured neither visible to the rest of the company. This could result in less focus and understanding of what sourcing really delivers as bottom line result to the company.