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One Sourcing Strategy Does Not Fit All: How to Select the Right Sourcing Strategy to Maximize Results

Author(s):

Keith Hausmann
Keith Hausmann, Vice President Sourcing and Category Management, ICG Commerce, 215-649-1057; khausmann@icgcommerce.com

89th Annual International Conference Proceedings - 2004 - Philadelphia, PA
Abstract

The typical North American based purchaser of raw materials and operating goods and services buys more than 300 unique categories from more than 10,000 unique suppliers. The internal (demand drivers, key stakeholders, business processes) and external (supply markets, business processes) characteristics of the 300 or more categories vary greatly from category to category. Intuitively, it would be easy for a sourcing professional to envision the need for a wide variety of sourcing strategies for categories that possess characteristics that vary as widely as life insurance, corrugated packaging, MRO supplies and janitorial services (categories all purchased by typical ISM member companies/participants). As trends in sourcing processes, tools, techniques, methodologies and service providers come into vogue and go through usage trials and cycles with purchasing entities, it is common for buyers to adopt the sourcing approach/tool that is currently most popular or that they are most comfortable with rather than the sourcing approach that is best suited to the category. For example, the first half of the 1990’s saw the strong emergence of “the 8 step strategic sourcing methodology” while the late 1990’s and early 2000’s saw the popularity of Internet based reverse auctions soar. Similarly the popularity of consortiums, aggregators and buying groups has risen and fallen several times in the last decade. Drawing on extensive experience with Fortune 1000 companies, this presentation will guide the audience through segmentation of a typical Fortune 1000 buying category profile and outline potential characteristics these categories may possess. Using examples, the characteristics of particular category types will be mapped to different sourcing strategies, tools and methods such that audience participants will be able to guide their sourcing appropriately based on the categories being selected to source.

One Sourcing Strategy Does Not Fit All: How to Select the Right Sourcing Strategy to Maximize Result — 18 KB (PDF)