Last week, Michael Lamoureux asked Dave Stephens, Dave Bush, Jason Busch, Tim Minahan and I to post on the future of sourcing. I’ve found their responses fascinating and informative. I’m regularly astonished at the insights I get from this group of guys (Why no women?) and how narrowly my expertise is focused. But, going with my strengths, I am posting on the future of sourcing as it relates to structuring effective purchaser / vendor relationships.
A couple of months ago I posted on a little experiment I conducted on sourcing music based on stated requirements. In the study I analysed the appropriateness of songs found by Pandora compared to songs played by Yahoo Music given the same requirements i.e. songs liked by a Dandy Warhols fan. I concluded that Pandora found more suitable music than Yahoo.
In my opinion, improving techniques to find vendors is not the future of sourcing. Reflecting on the best examples of sourcing I’ve seen over the past few years, I realised that they all involve the purchaser and the vendor creating a more efficient relationship structure rather than a purchaser simply finding a new vendor.
An example of a more efficient relationship structure is the vendor and purchaser using a novel distribution strategy that creates operational efficiencies for the vendor and a competitive advantage for the purchaser; or the vendor and purchaser working together to impact demand rather than unit cost. The critical feature of the more efficient relationship structure is that it is created by the purchaser contributing internal knowledge about such things as its purchasing patterns, logistical challenges and payment requirements and the vendor contributing its market knowledge to produce an item or service that perfectly fits the purchaser’s needs and the vendor’s ability to service those needs.
The future of sourcing will involve good purchasers using better techniques to find good vendors but it will also involve good purchasers and vendors creating great new products and services. As Time Magazine says of Rogers and Hammerstein “Each had already made his mark — but as collaborators they created musical theater that enchanted audiences and redefined the art form”.
I wonder what technology will enable this type of collaborative innovation?
[...] As I looked into the other people that were participating – Dave from Oracle with deep market knowledge at the largest companies, Tim with access to every CPO in the world, Jason as the new world leader of online media in sourcing, and Doug who actually is working in sourcing, it seemed to me that just creating my own forecast of the future would be somewhat redundant, and maybe even less credible. My contrarian view is more from what I have seen already – since 2000. [...]
I have seen the same thing as a trend – considering vendors as business partners rather than adversarial suppliers that can be easily interchanged.
More transparency of both business goals and profit margins will probably lead to more cost-plus type of contracts.
Interesting for my dreams of stainless steel and a sourcing knowledge center.
I’m a student Business Engineering. Do you know anyone who like to partner up to build up a 95% accurate Global List of all stainless steel suppliers of long products in the world? I already have a list of 195 companies which is 25% accurate.
Aah, a promising procurement professional … dreaming of your commodity category!