Strategic Sourcing Management

Structural and Operational Decision-making

Olivier Bruel

• Publisher: Kogan Page
• Year: 2016
• Print ISBN: 9780749476991
• eBook ISBN: 9780749477004
• Edition: 1
• Topic: Business
• Subtopic: Operations
• Index: Business

Strategic Sourcing Management examines procurement and supply management in detail, covering the three dimensions of competitiveness, effectiveness and efficiency. Written by Olivier Bruel, Professor Emeritus HEC Paris, and a team of contributing experts from academia, consulting and industry, the book is organised into four parts: strategic decisions; operational management of procurement and related supply chain; management of human resources and dedicated information systems; management of performance and change.

This book has been written with a comprehensive global and coherent approach but the chapters are self-standing, enabling the reader to dip into different sections according to need. Strategic Sourcing Management considers both tactical and strategic perspectives that link with a corporate strategy and it includes dedicated chapters on how to set up a Strategic Sourcing function. The text is enriched with clear graphics and solid examples of best practice. Strategic Sourcing Management is a robust text based on both research and experience, so an essential reference for practitioners and academics working in or studying procurement and supply management. It is suitable for anyone involved in procurement and supply management at a senior level but also for general management enabling them to understand the mechanisms of value creation through Strategic Sourcing.

PART ONE

Strategic decisions and supplier policies

This part focuses exclusively on strategic procurement decisions – decisions that have the greatest structural effect on the function’s performance.

In Chapter 1, we situate procurement within a company’s general strategy by showing why and how it plays a key role and should be taken into account. After clearing up a few semantic matters, and going over the process in which a company develops its general strategy, we delve into issues relating to the procurement function, its missions and its economic contribution to corporate competitiveness as well as to innovation, development and value creation. A global presentation of the major decisions and key processes associated with the procurement function is provided.

Chapter 2 details the concepts and generic procedures involved in a marketing-based approach to procurement. We deal with the principles of strategic segmentation for procurement portfolios, then develop ways in which procurement strategies are defined by offering a detailed presentation of the main levers and best practices likely to be called upon. The major alternative strategies are also discussed in order to illustrate the necessity to differentiate approaches based on the logic and specificities of the main portfolio segments. Finally, a ‘dynamic’ short-term vision is examined by going over the key stages making up a typical procurement process.

In Chapter 3, the reader will find a thorough analysis of the company innovation process and its links with upstream procurement, with a focus on the ways in which the procurement function intervenes in product design and development, and also, more widely, in the definition of technical specifications. This entire area is examined via a detailed study of the different levers for specific actions.

Chapter 4 concentrates wholly on policies to be followed with suppliers, from various angles. Attention is paid, in particular, to the range of supplier profiles depending on the type of relationship that one wishes to establish (head-on confrontation or collaborative approaches), appropriate sourcing methods, as well as principles and methods to be employed for ‘homologation’ – in the UK, the process of qualifying suppliers – then the choice and management of a supplier panel. Practical and in-depth analysis of supplier relationship management (SRM) and collaborative supplier management is also provided.

Globalization is a crucial axis of procurement strategy, and Chapter 5 is exclusively devoted to this topic. Starting with an outline of arguments in favour of international deployment of purchasing, the chapter then details strategic and operational approaches for proceeding in this direction. A structured sequential approach for steering this type of evolution is put forward; the sequence of a project and its operational implementation are then discussed; the chapter concludes with a presentation of the main countertrade solutions in international sales strategies and the consequential impact on procurement activity.

Today, it is unthinkable to design a procurement strategy and to implement purchasing practices without taking into account and respecting ethical principles of social and environmental responsibility. Therefore, Chapter 6 is entirely dedicated to this topic, offering in-depth analysis of the issues at stake before explaining, in detail, the relevant approaches to be taken by a procurement department. Change management as well as the conditions for success are discussed in a practical and comprehensive manner.

Finally, it is undeniable that the general strategy of any mature company includes analysis of the value chain and refocusing on the ‘core activity’, very often leading to decisions of greater or lesser importance regarding outsourcing. Chapter 7 deals with these issues by showing how the procurement function is involved in these approaches and should take charge of their implementation. Decisions regarding complete or partial outsourcing of procurement activities themselves are also considered in depth from two viewpoints: why to outsource them and how to carry out such a project.

01

Procurement

Its integration in a company’s general strategy

From a company’s perspective, procurement is primarily a strategic function responsible for:

sourcing (searching for) and acquiring capital equipment, goods and services requested (sometimes directly) by the final client and (always) by internal stakeholders in optimal conditions in terms of costs, quality and service, as well as contributing to value creation by innovation, all the while controlling the different short- and medium-term risks encountered when operating in this activity.

This function, located upstream in the global supply chain, should obviously today, and in practically all economic sectors, play a fundamental role in all companies (industrial, commercial or services, public or private) and in many organizations, even non-profit ones (such as associations and NGOs).

Before presenting the specific missions and contributions of procurement, and the way in which it is integrated into general strategy, it is fitting to position the function within the supply chain, and then to clarify the terminology that will be used throughout this book by its authors.

1/1 Definitions and introductory reminders: procurement, supply and supply chain

The terms used to designate the procurement function have long raised a fundamental problem relating to its perceived contribution. In addition, since the concept of the supply chain has emerged, many have wondered whether procurement is an integral upstream component of the chain, or whether it is an independent function. And where does the supply function stand in all this?

1/1.1 Supply chain and the procurem...

Table of contents

• Cover
• Title Page
• Contents
• Preface
• Introduction
• PART ONE Strategic decisions and supplier policies
• PART TWO Operational management of procurement
• PART THREE Organization and management of resources
• PART FOUR Performance and change management
• Co-author biographies
• Glossary
• Further reading
• References
• Index
• Copyright