Background
In our last two articles, we highlighted the importance of procurement organisations and the relationships with their suppliers.
As a decision maker in an organisation, it is hoped that these series will help shape the thinking about the role of procurement organisations vis-à-vis the often ignored strategic importance.
In this issue, we would be discussing strategic sourcing, a topic that has generated so much buzz globally in the last decade.
Strategic sourcing involves uncovering methods and waays to get the best products and services at the best value. It usually starts with drilling down an organisation’s spending; identifying what is spent on different products or services or who the service providers and suppliers are, alternative sources, etc. At the end, ensuring that we start putting together a process to ensure that the total cost of ownership is taken into consideration before a purchase decision is made. Let’s bring it a little closer home:
Abel meets the blue chip
After about eight years working in various administrative and procurement function in medium-size organisations, Abel finally got his big break:
As the new group head of the procurement unit of a Nigerian blue chip conglomerate, he attended his first management meeting with a lot of enthusiasm; he would finally sit with the ’executives and be part of decisions involving hundreds of millions of naira.
At the meeting, the CEO announced that they had to cut cost by 20 percent in the new financial year, a trend that has become more common to sustain profitability amid global economic pressures.
Abel was a bit detached until he was called upon as the anchor of this cost cutting programme. The CEO wanted to maintain same level of products and service acquired for operations but at 20 percent less cost.
Abel then realised that this was indeed an opportunity to implement some of the strategic sourcing practices he has been exposed to in a recent on-the job training he attended.
He assigned members of his team to identify what the company was spending on, categorise by item and supplier, and identify other suppliers they could get similar products from, and through the process maintain quality and service levels, without terminating premature contacts, although he encouraged them to identify current contracts that could be re-negotiated.
Thought series is powered by eSourcingng of NetPlus Advisory Limited. For enquiries on how to apply these concepts to your Organization, comments or request for proposals, send an email to
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or contact Bamitale on 070-300-23333. www.esourcingng.com, facebook.com/esourcingng
