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• The role of the procurement department in businesses today exceeds just finding the lowest possible price for items the organization needs.
•The global nature of business today is such that a business can source items from anywhere in the world if it makes logistical and business sense.
• It’s about establishing relationships and hedging against risk. Strategic sourcing entails putting these factors into perspective and making the right decisions for the business.
The strategic sourcing roles and responsibilities sprung up 40 years ago, but the role has become more eminent in the recent past. Strategic sourcing managers today involve themselves in selecting and managing vendor relationships. To achieve this, they heavily rely on analytics to make timely and objective decisions that support overall organizational goals.
Strategic Sourcing Manager vs Procurement Manager
The difference between a strategic sourcing manager’s role and that of a procurement manager depends on the size of the organization and the maturity of its procurement operations. A strategic sourcing manager role is likely to be required in a large enterprise with a significant procurement budget and working with numerous vendors spread out in a large geographical area. In complex procurement scenarios, they need to factor incompatibility with vendors, the risk of overreliance on one vendor, the benefits of consolidation, and so forth.
Let’s consider some specific strategic sourcing roles and responsibilities in a manager’s job description.
Development of Procurement Policies
The strategic sourcing manager is involved in determining and writing down the procurement strategy for a business. This strategy should be written to support the larger organizational goals. For instance, if the goal is to rely heavily on analytics for faster workflow and better decision-making, the strategic sourcing manager should lead digital transformation initiatives within the company by pushing for capital investment into e-procurement software.
Lead Collaboration with Stakeholders
The strategic sourcing manager works with external and internal stakeholders to understand what the business’s procurement needs are. For instance, the various department heads need an open communication channel with the strategic sourcing manager so that they can express their quality needs, frustrations with vendors, and more. External stakeholders include the vendors and creditors. The strategic sourcing manager acts as the point of contact between the organization and these external partners.
The selection of vendors can be quite complex and detailed. The strategic sourcing manager leads issuing requests for proposals from potential vendors. They then lead the panel that receives and evaluates the proposals before finally settling for a vendor. The most important part of vendor selection is perhaps developing the criteria based on organizational needs and strategic goals.
Building and Maintaining Relationships with vendors.
The management of relationships with vendors begins with the negotiation, contracting, and onboarding process for selected vendors. The strategic sourcing manager ensures that the onboarding process is smooth, often through a vendor portal that standardizes the process for all vendors. Throughout the life of the relationship, the manager listens to vendors’ concerns and ensures they are paid on time.
For the organization, the manager leads supplier performance evaluation and risk assessment on an ongoing basis. It’s important that the organization monitors suppliers’ activities to ensure they do not put the organization at any kind of risk. For instance, if a vendor is facing accusations of unfair labor practices, working with them could bring the organization into disrepute.
Analyzing Procurement Data
As indicated, one of the most important strategic sourcing roles and responsibilities of the strategic sourcing manager is using data to make decisions. They will use data to benchmark performance with industry peers, compare spending between periods, and even compute the return on investment in procurement tools.
The strategic sourcing managers are also involved in reviewing procurement processes. Changes may be necessary because of non-performance or changes in the procurement needs of the organization.
Skills Strategic Sourcing Managers Need
Some important skills to succeed as a strategic sourcing manager include:
- Risk evaluation and management– The strategic sourcing manager should be capable of identifying risk in a rapidly dynamic business environment. They should provide counsel on mitigation.
- Negotiation Skills– They need to negotiate favorable contract terms on behalf of the organization without risking relationships with vendors
- Adaptability– The strategic sourcing manager needs to be flexible enough to respond to changes in the business environment. For instance, if a vendor pulls out or is in breach of contract terms, the manager has to respond quickly.
- Problem Solving– In complex procurement operations, there is always a problem to be solved. This includes unexpected costs, changes in regulations, and logistical problems. Sometimes, the problems call for unconventional decisions. The strategic sourcing manager has to exercise discretion in such situations.
- Details oriented– The strategic sourcing manager has to be a stickler for details. A minor omission could lead to massive losses or problems for a company. As such, the manager has to be uncompromising about details. In addition, they need to be comfortable consuming large volumes of data and analytics. They should incorporate data into their decision-making.
Familiarity with Tools
Another important skill for a strategic sourcing manager is being able to use strategic sourcing software. Such software makes it easy to prepare and send RFPs. It also eases communication with stakeholders, enables assigning of tasks, setting up reminders, and so forth.
If your organization is seeking to empower its strategic sourcing efforts, you can do so using e-procurement solutions from ProcurePort. ProcurePort is the world’s leading provider of e-procurement solutions.