Sourcing v/s Procurement- The tug of war
Organizations have come a long way, stepping away from considering the purchase department as an administrative function which is limited to order management, to the current scenario of strategic sourcing and procurement. Sourcing personnel have now begun being involved in the development of requirements, specifications and value analysis (for example, automotive industry leads through concurrent engineering, VA/VE programs perpetually). However, traditional organizations which have a common team which handles sourcing as well as procurement activities often find that the transactional procurement activities take precedence over sourcing. This leads to savings leakages, opportunities lost and compliance issues. The scenario could be because of various reasons: time and capacity constraints, lack of skilled resources, lack of use of technology tools and non-standardized processes etc.
So, what are the ways out? A clear segregation between the transactional procurement and sourcing departments, outsourcing of the transactional processes and the non-critical activities/categories thus freeing time of the in-house resources to concentrate on more strategic work, and more use of technology like e-sourcing tools, process automation etc.
This New Year might bring in new challenges for the sourcing and procurement functions the world over, but with the best practices being put in place in the function, they would be well versed to meet the challenges head-on.