New Book Details Strategic Sourcing for Indirect

By Susan Avery

November 06, 2011 at 2:30 PM

Joe Payne and William Dorn of Source One Management Services know strategic sourcing. They know indirect. And they know purchasing professionals.  

“I don’t think people are aware of the pressure that’s put on procurement and finance groups to cut costs and to streamline supply chains when they don’t have the manpower, time or access to information they need,” says Dorn, director of operations at Source One, a provider of procurement services in Willow Grove, Pa. 

Managing_Indirect_Spend.jpg

Dorn, with Payne, who is director of strategic sourcing, are authors of a new book, Managing Indirect Spend: Enhancing Profitability through Strategic Sourcing. The two spoke about their endeavor recently with My Purchasing Center.

While Payne and Dorn wrote the book for purchasing professionals who manage indirect spend categories such as MRO (Maintenance, Repair, Operations), telecom, office supplies and services, among others, they also see it as a source for those who don’t have a procurement background and are given responsibility for cost reduction. 

“At Source One, we are usually brought in by the CEO or CFO, someone who doesn’t have responsibility for sourcing and doesn’t know where to start or how to move ahead with a cost-reduction initiative,” says Dorn. The two wrote the book, with help from colleagues, based on their experience at Source One. 

The 446-page book covers Managing Indirect Spend in four parts: The process (i.e., collecting data, conducting research, the RFx process, negotiations, implementation and continuous improvement, etc.), the tools, examples from the field, and how to do it. An introduction describes what is indirect spend and how one manages it. 

“A large portion of our book focuses on the fact that what many people think is strategic sourcing really is not,” says Dorn. “Many people think developing an RFP (Request for Proposal) and getting three bids is strategic sourcing. It is not.”

Dorn-High-REs.jpg

The two authors carry the theme on what strategic sourcing is not through the book, including to a chapter on scorecarding. They say that in their experience they’ve seen a lot of scorecards and sometimes are asked simply to evaluate scorecards. 

“We try to refocus on what is really important with scorecards,” says Dorn. “Many companies use criteria to disqualify suppliers without any really good reason behind it,” such as the time a company has been in business or whether it received a specific award.   

“The idea of scorecarding is to inspire competition among suppliers,” Dorn says, explaining that companies need to dig deep and think about why questions are being asked and what the answers should be.

Bookstuff_Headshot_-_Joe.jpg

And for those new to indirect or struggling to manage the category, Payne offers this advice: “Make sure you have executive sponsorship, someone who is on board with the program and there to back you up when you hit a roadblock,” he says. “And, at the same time, seek out end users, stakeholders and people who work with suppliers daily and include them in the process from the beginning. They will be less reluctant to change.” 

For more information on the book, Managing Indirect Spend: Enhancing Profitability through Strategic Sourcing, please go to: http://www.strategicsourcingbook.com/


 



Tags: Professional development Strategic sourcing MRO/indirect Procurement Office products sourcing Services sourcing
Category: News Article

Susan Avery

user_avatar

Susan Avery is Editor-in-Chief at My Purchasing Center. She writes articles, blogs and white papers and manages and creates other content for the online procurement and supply management publication. She produces and moderates roundtable discussions, podcasts, webcasts and video interviews. Susan has 30 years experience covering procurement and supply management for Purchasing magazine and Purchasing.com. 


Please add a comment

Posted by Nicole on
reason why, before siignng on the dotted line and entering into a lengthy contract, you should investigate not only the companies credentials but also the procedures they have in place should an aspect of packing, dispatch or delivery go
Leave a Reply



(Your email will not be publicly displayed.)

Captcha Code

Click the image to see another captcha.


Related Content

Thought Leadership and the Demise of Your Third-Party MRO Outsourcing Program: Part 4

George E. Krauter

When one defines third-party MRO (3PMRO) success, one assumes that fundamental operations are being executed and that expectations are being met (i.e., ROI goals are surpassed} Read More

Guidance for Addressing the New Talent Acquisition Challenge

Dennis Bouley

The US Labor Department reported in March of this year that there were 6.6 million job openings, a record high. Although most of us applaud these numbers Read More

Millennials in Supply Chain Management Seek Advancement and Development Opportunities

Marisa Brown

Millennials working in the supply chain management field don’t fit the mold that the older generation assumes for them. APQC’s recent study Read More


Supplier Profiles

Staples

Staples Advantage is the one supplier that offers all the business solutions you need, all with the expertise of a specialty vendor. Read More

Digi-Key

It started in 1972 with an idea, a new concept in distribution. Today, Digi-Key Corporation is one of the fastest-growing electronic component distributors in the World. The stimulus for this growth is Digi-Key's customer-centered business philosophy… Read More

Lunney Advisory Group

Lunney Advisory Group was founded in 2007. Our firm is not your typical consulting company. Some members of our firm are highly qualified and experienced industry executives/practitioners while others are full time or adjunct university professors.… Read More


Webcasts

What CEOs Expect Of Purchasing

Guest Contributor

Procurement and supply management leaders have a seat at the table, and management’s expectations are high. But what do CEOs really want, and is purchasing delivering on these expectations? This webcast looks at how procurement and supply management … Read More

Growing Purchasing Influence On Indirect Spending

Guest Contributor

At world-class companies, purchasing’s influence touches just about every area of spending. But, how exactly do procurement teams get to the point where other departments approach them for help with sourcing such indirect categories as human resource… Read More

Procurement-Finance Collaboration

Guest Contributor

Procurement & finance are two business functions which are often at loggerheads with each other. One reason for this is the lack of perception alignment on an important metric of procurement and finance performance - 'savings'. Read More