Supply Chain Professionals
Strategic Sourcing and Supply Chain
Strategic Sourcing and Supply Chain is a key area under operations that has a crucial impact on the running of a business. Most entities exist to provide a certain set of products and/or services for their customers. The Supply Chain, very simplistically speaking, starts with development of a good demand forecast, procurement of all goods and services necessary to meet the demand, get the products manufactured/ developed, and eventually hand it over to customers. Of course, this entire chain has multiple sub chains and comes with huge levels of complexity depending on the product manufactured or the service delivered. Strategic Sourcing and Supply Chain can be a source of great advantage and impact when done efficiently, conversely, can contribute to serious consequences when executed sub optimally.
Practically speaking, many companies like to structure this in 2 broad areas
– Strategic Sourcing and Procurement functions
– Supply Chain functions
Strategic Sourcing and Procurement:
The Strategic Sourcing role is responsible for procuring the necessary goods and services for a company and ensuring availability for operations when necessary. They need to procure at the most optimized landed cost. Experts suggest typically over 50% of a company’s turnover is spent in procuring goods and services. In recent times, post Covid, post Ukraine and middle east wars, a lot of uncertainty and complexity has been added to this subject, which requires critical analytics and capability to use digital tools.
Among other things, Strategic Sourcing Managers now need to be able to conduct category analytics, e.g. Spend Analytics, Supply Market Analysis, Porter Model and Kraljic Matrix development, develop Clean Sheet and Total cost of Ownership models etc., deploy all insights to finally develop a Category and Supply strategy. They will then run a detailed RFQ process, negotiate with vendors and finally agree on pricing and terms and conditions for a Supply Contract. Doing this job well needs a detailed understanding of category cost structure, market dynamics, risk estimation and mitigation understanding and ability to lead category work to achieve Scope 3 reduction targets
Three broad archetypes of roles are typically seen in smart Procurement Organisations, that are normally led by a Chief Procurement Officer (CPO)
- Category Leader/ Manager – Responsible for the overall Category
- Category Analyst – Support the Category Leader with all necessary analytics
- Project Management Office Lead (PMO) – Support the CPO and Category leaders in tracking their initiatives and help clearing obstacles.
- Demand Estimation and Planning Leader – Responsible for analyzing past and future customer demand and translating that into an actionable short term production and sourcing plan
- Materials Manager, Stores Manager, Inventory Manager – These roles sometime overlap a bit, focuses primarily on internal material movement and dispatches
- Logistics Manager – Responsible for inbound and outbound logistics
- Imports and Exports Manager – Responsible for getting imported goods in the factory and exporting goods to international customers through multiple modes of transportation
