SourcingStrategy

A pervasive business challenge many strategic sourcing business frameworks aim to fully address is the challenge of creating sustainable growth procurement strategy. Additionally, 80% of these companies are concentrated across the primary super verticals of Financial Services, Healthcare, High-Tech, and CPRD. For those companies that do achieve significant growth rates, these growth rates also erode quickly. Over the last 50 years, Fortune 500 businesses experience an average growth rate of in less than 8% in real terms (and under 10% in nominal terms). Large companies struggle to grow. Furthermore, real top line growth is much less stable than return on invested capital going from 1% to 11%. Only about a quarter of the Fortune 500 companies are able to sustain revenue strategic sourcing above the national GDP and sustain returns above the Standard & Poors 500. Companies achieving greater than 20-25% top line growth almost always diminish down to 5% within 5-10 years.

To enable procurement strategy, we must try and create the right conditions are in place, eg timing and strategy  participants strategic sourcing. A diverse team bringing varying perspectives will contribute better results for strategy development. Separate strategy development effort from fiscal planning. Spread senior executive level conversations out over a period of months. Coming up with a new procurement strategy every year is actually not productive; rather, conduct a complete ground-up  procurement strategy every 3-5 years depending on the pace of the industry. Those who participate in the procurement strategy session must be from a diverse mix of functional specialties, that involve both internal and external participants, and should have intimacy with the issue in discussion.

Each strategic sourcing stage is seen as a a unique organizational structure and set of management goals procurement strategy. Each stage takes a different pair of management style. The business partcipates in detailed strategic sourcing and strategic planning. The executive team accounts for driving innovation and risk management to guide the company from ossification. It is often not similar team such as the very first 2 stages. Important decisions are delegated to line managers who have teams of their own to execute on tasks. By the last stage, the management team is adequately staffed and experienced.

A pervasive business scenario many strategic sourcing business frameworks try to address is the challenge of achieving sustainable sales growth strategic sourcing. It can’t be argued that most organizations experience difficulty gaining significant strategic sourcing, YoY. Companies achieving greater than 25% top line growth typically diminish down to 5% within 5-10 years. Between the 1960s and 2010, Fortune 50 organizations experience an average growth rate of in less than 6% in real terms (and under 10% in nominal terms). Only about a small fraction of the Fortune 500 companies are able to sustain revenue strategic sourcing above the national GDP and sustain returns above the Standard & Poors 500. Additionally, 90% of most businesses are concentrated across the four sectors of Financial Service Companies, Life Sciences, High-Tech, and CPRD. Enterprise companies struggle to grow. Moreover, real top line growth fluctuates more than return on invested capital going from 5% to 11%.

In current thinking, there are a couple schools of thinking around strategic sourcing strategic sourcing. Henry Mintzberg opts for an organization, bottom-ups process to drive business strategy development that adheres to organizational configuration. Penetrating the market works best as the product is at the mainstream market and competition is vying for share strategic sourcing. When the competitive environment is like this, this is a race to capture market share. As we enter the mainstream market, as survival is correlated with share. Many businesses, both incumbents and new entrants will adopt pricing penetration strategy to absorb share.

Source(s) http://learnppt.com/powerpoint/44_Strategic-Sourcing.php http://www.mckinsey.com/clientservice/operations/purchase/ourapproach/