Strategic Sourcing is one of the most misused procurement labels in the industry today. There are an endless number of purchasing activities, which are lumped under this title, but very few should actually be considered as Strategic Sourcing.
The 2009 CIO Study is part of the IBM C-Suite Study Series. Published by the IBM Institute for Business Value, the C-Suite Study Series publishes in-depth studies for Chief Executive Officers, Chief Finance Officers, Chief Human Resource Officers and most recently, Chief Supply Chain Officers. The CIO Study included more than 2,500 face-to-face interviews, conducted over four months from January to April 2009. In addition to the detailed personal feedback, IBM also incorporated financial metrics and detailed statistical analysis into the findings.
The report also highlights a number of recommendations ranging from strategic business actions and use of key technologies that IBM has identified that CIOs can implement, based on CIO feedback from the study. The full 2009 CIO Study and interviews about the study are available at https://www.ibm.com/ciostudy, and a video with IBM CIO Pat Toole is available at https://www.youtube.com/watch?v=6AqSMCREXDE
When looking for ways to trim costs and maximize every dollar, procurement is an area that requires careful attention. This is, after all, where you are investing hard earned dollars for products and services that you must have to keep your organization running. That's buying everything from paper clips to professional services.
Regardless of the economic conditions, companies that can quickly respond and take action to stay in the game ultimately emerge as market leaders. Now more than ever, the next generation of pharmaceutical and biotechnology leaders is being tested. Organizations that manage their cost structures and position themselves for growth can gain significant market share as the economy improves and the U.S. healthcare reform program evolves.
Hackett's study looked at how effectively procurement organizations manage and control non-recurring project-based indirect supplier expenditures in IT-Telecom, HR, Sales & Marketing, Finance & Corporate Services, and Capital Equipment & Services. The study, which polled both procurement organizations and also the budget owning functions, found that project-based spending represents up to 35% of all the total procurement spending, and is often not well supported by the sourcing resources or processes of purchasing departments. In fact, the process is managed by dedicated sourcing professionals with specialized expertise only 17% of the time.
69% of purchasing professionals are yet to examine the impact of the last six months on their supply management strategy, leaving them exposed to potential long-term problems.
Of the 31% that have examined the impact of the recent economic downturn, almost three quarters (72%) are introducing changes to their supplier management strategy, indicating that there is a fundamental need for purchasing professionals to evaluate the risks that recession has created if they are to effectively manage future changes.
"When costs need to be cut and supplier contracts renegotiated, it is clear that procurement can play a leading role in steering their businesses through the current economic turbulence," says Nader Sabbaghian, CEO of BravoSolution.