The procurement process is truly a comprehensive and fully integrated one. It is one of the systems that affects and involves the entirety of the business from top to bottom. One of the main components that makes up procurement is sourcing. This is contrary to the sometimes-popular misnomer that sourcing and procurement are interchangeable terms. So, what is sourcing then? Well, in other words, while sourcing is a part of the whole of procurement, it is not the entirety. That being said, however, sourcing in and of itself is a vital component to developing a strong procurement process and business reputation. A growing best-practice and industry standard in sourcing specifically, is compliant sourcing.
Compliant sourcing relies on a team of sourcing specialists who are able to identify opportunities throughout the entirety of the sourcing process. This is important because, in compliant sourcing, the role of the sourcing specialist is emphasized.
The Role of Sourcing Specialists in Compliant Sourcing
Hiring a sourcing specialist is a wise move in addressing strategic and compliant sourcing. The sourcing specialist needs a special ability to view processes from a birds-eye view. This means examining and evaluating the entirety of the sourcing process infinite detail. Then, beyond the evaluation process; the sourcing specialists need to be able to identify opportunities with vendors on a regular and moving basis.
What this means is that as an organization moves through its regular flow of work, consuming goods and services while also producing goods and services; the sourcing team led by the sourcing specialist, needs to continually source the required goods and services for that business’s ability to operate regularly without interruption.
Compliant sourcing, however, takes the responsibility of the sourcing specialist to the next level. With compliant sourcing, the sourcing specialists not only need to identify opportunities in their sourcing process; they need to be able to differentiate between responsible and irresponsible partnerships.
The Importance of Compliant Sourcing
While sourcing itself is integral to your organization’s ability to operate regularly; compliant sourcing has become vital to your organization’s image. In today’s marketplace, the consumer has more buying power than they have ever before. This is mainly due to the rise of the internet and the era of information.
However, it’s important to note that this is also, in part, the result of stronger morals being upheld in the business community. With the rise of social responsibility as the main component of creating a stronger business presence; it’s becoming more expected that businesses uphold themselves to strong moral standards.
This is specifically emphasized in sourcing and procurement processes. As raw materials, goods, and services are often sourced from around the globe, more and more consumers are paying attention to the labor-practices and sourcing-practices of those communities. In turn, this knowledge leads many to “vote with their dollar” perse. In other words, taking their business to organizations that recognize the inhumane business practices that still exist within our world; choose not to support or partner with those still engaged in such practices.
While there are plenty of moral reasons for businesses to engage in compliant sourcing, which helps minimize the amount of exposure to these negative practices, the strongest argument is likely the impact that compliant sourcing has on your organizations’ reputation, and community presence, which in turn leads to boosts in vital business metrics.
Some of the benefits of boosting your organization’s reputation through compliant sourcing is seen in customer retention, customer experience, the volume of customer referrals, and importantly, the average lifetime value of any individual customer.
Integrating Compliant Sourcing with Strategic Sourcing
Strategic sourcing objectives include building and developing a comprehensive procurement process that works nearly autonomously once in motion. While no system should be totally automated, as maintenance and oversight are always required; building a strategic sourcing plan that includes compliant sourcing will, without a doubt, create higher rates of efficiency within your organization.
The objectives of strategic sourcing fall exactly in line with the objectives of compliant sourcing. As both terms require the hiring of sourcing specialists and the implementation of procurement sourcing software. Additionally, these two terms both rely on the organization’s ability to evaluate the consumption rate of goods and services present internally, and fulfill these needs on an ongoing basis, without interrupting regular business or causing excess spending.
This is another main component of sourcing in general: cost saving and a reduction in excess spending. As any business person already knows, creating efficiency and cost savings in operations is always a key goal. Achieving these goals through compliant sourcing is even more impressive.
It’s also important to realize that compliant sourcing has a wide set of definitions. The branches of compliant sourcing can reach from everything to, as we’ve already covered, poor labor practices, to poor environmental practices. It’s very integral to realize which components of compliance are most impactful to your constituents, and making sure to prioritize partnering with responsible vendors in that realm.
Finding cost-saving opportunities is another reason that procurement professionals are relying more and more on procurement and sourcing software. Implementing these types of software allows for higher efficiency in the sourcing process overall while the sourcing professionals are still able to create parameters for filtering potential vendors and vet the results.
For more information on compliant sourcing or other best-practices regarding sourcing; visit ProcurePort today. ProcurePort is the internet’s premier source for everything procurement from information, to knowledge, and software.
