Milling & Baking News - May 22, 2018 - 41

Procurement Update

in the end left upper management
agnostic to the hype around the approach but happy with the savings
when generated.
Strategic sourcing has been right
for procurement and for business. Its
introduction and maturity have been
embraced conceptually, but in most
cases it has not been sustained as an
effective strategic tool.
These shortcomings aside, a gamechanging opportunity for procurement has emerged that is cause for
optimism. In this approach, sourcing
is viewed in a truly cyclical fashion
where the business and the supply
base form a more integral role in the
approach and success.
The concept is called cyclical category management. The end game
for me is less the singular cost reduction path and more the broad business
value proposition path. The strategic
sourcing model approaches do not go
away; they give-way to a procurement
business approach that is founded
on what the business needs and how
the external world can help ... with
procurement as the conduit. Sounds
about the same to you maybe, but it
really isn't. The reasons that I mention
earlier for the lack of cross-space embeddedness for strategic sourcing are
really founded on three things:
1. Companies today and even more
so tomorrow need help in growing
their businesses while at the same
time anticipating and dealing with
the disruption that is ever increasing.
The business has not been an integral
part in strategic sourcing.

2. Dealing with sourcing in a linear
fashion does not create the mindset shift
that is required for change. In many of
my conversations with procurement
leaders and buyers, they talk strategic
sourcing as an event not something embedded into the cultural fabric.
3. Capabilities and enablement are
critically important to embeddedness. The concepts around sourcing
need to be culturally relevant and
structurally enabled.
Cyclical category management employs the core of "strategic sourcing"
stages, the interdependencies demanded for success and the formality
that suggests rigor and governance. It
also employs an approach to category
strategies that requires a visible connection to business strategy, a category cost basis realized through mutual
buyer and seller agreement, and a
connection to the external world that
provides recurring inputs to nourish
a business in need of help. My advice to companies interested in either
moving beyond "strategic sourcing"
or leaping to a new sourcing approach is to build a transformational
launch into cyclical category management. Companies that have done this
today, knowingly or unknowingly,
and calling the approach many different things, have created contextual
and structural elements within their
organizations to enable its embeddedness and sustainability. Here are
a few of these:
* Recognition that moving to a different approach to sourcing is transformational and requires real change

and change management
* Understanding that procurement
vision and strategy must be grounded in business vision and strategy
and that business need is clearly evident in every procurement decision
that is executed.
* Organization is an enabler, and organization design and culture need to
act as an enabler. Organization design
needs to create focus where it is most
needed for effectiveness, and efficiency where it can contribute to strategic
re-investment. Organization culture
has to embrace and foster a cyclical
and connected approach to sourcing
instead of linear, insular approach.
* Suppliers must be cast in their appropriate light. Not all suppliers will
be strategic, but the entire supply base
needs to understand how they will
contribute to the value proposition.
* Procurement must be able to
mine the external world, and while
this takes new and maybe different
capabilities, it also requires a sense
for potential.
There are very few if any procurement leaders today who don't appreciate the importance of strategic
sourcing, but many who have not yet
fully incorporated it into the fabric of
their day to day.
As procurement seeks to land its
north star, it should consider the game
changing results for the companies
that embedding cyclical a category
management approach will yield. It's
really up to leaders themselves to step
into the fray as opposed to stepping
over it or bypassing it altogether. MBN

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