how to train strategic sourcing professionals

Strategic Sourcing – outsourcing, offshoring and shared service centres essentially – has been a core activity for most medium to large organisations, and many smaller ones, for at least a couple of decades. Despite that fact training programmes are not so easy to find. The main problem is that it spans a number of different disciplines. Practitioners of strategic sourcing need to have knowledge of the law, procurement, project management, contract management, risk, strategy and commercial management amongst other things. On top of that we also need to consider that there are two perspectives, buyer and supplier, which further complicates the design of training programmes.

The starting point is to consider the strategic sourcing life cycle. This is now well understood, although there may be differences in the design and language used by the various organisations, consultancies, associations or international standard setters. 

  The cycles of the life cycle are measured in years, and in some cases can be decades long. The various activities across the life cycle are undertaken by a number of different people with a wide range of skills and experience. As strategic sourcing becomes recognised as a core competency by more organisations who see the need to be flexible in how they source the services the organisation requires there is a greater need for strategic sourcing specialists who can facilitate activities across the entire life cycle.

Using the life cycle model we can describe into the following categories the capabilities we need to train.

1. The Principles of Strategic Sourcing
This provides a holistic view of the life cycle. This is crucial in ensuring there is an understanding of strategic sourcing as a fully integrated, joined up process rather than a series of disjointed projects. Many of the problems organisations have faced in managing outsourcing and other strategic sourcing initiatives can be traced back to this lack of a cohesive approach.
This module can be an introduction for those who are new to strategic sourcing. It can also be the basis of a session for leaders who need to make strategic sourcing decisions and need a clear conceptual framework to help improve the rigour, rationality and quality of their decisions. The contribution of leaders to the long-term success of strategic sourcing is critical and investing in improving their capability is wise.

2. Contracting for Outsourcing
A popular strategic sourcing initiative is to outsource to an external supplier. Contracting for outsourcing services delivered over long periods does have particular risks distinct from contracting for the supply of one-off supplies and over the years a body of best practice has developed.  In some sectors there is the need to comply with regulatory frameworks. All too often organisations do not have the skills to contract for outsourcing and the result is a poor contract and worse poor results from the arrangement. Knowing what terms need to be priorities for agreement, having a broad appreciation of the relevant law, approaching negotiation in ways that support a long-term relationship and managing supplier selection processes efficiently are all critical capabilities that need to be covered in training programmes.

 

3. Governance, Risk and Performance Management
As strategic sourcing is a long-term commitment and one that is often of strategic importance to the organisation it is imperative to get governance, risk management and performance management right. In terms of the life cycle these topics are considered right from the beginning of the process in the Strategy phase. Strategic sourcing professional need to understand the value and importance of governance in strategic sourcing and be able to design effective structures and processes. Is not to exaggerate to say that if governance doesn’t function effectively then it is likely the contract will not deliver the benefits expected. Risk is at the heart of organisations and strategic sourcing professionals will be expected to understand key risk areas and how to mitigate them. For example, concentration risk can, particularly for large organisations, be an insidious threat that is poorly managed. Conduct risk has become a major challenge for many organisations who are wrestling with delivering consistent high-quality customer experiences. Performance management best practice is now a sophisticated science and includes understanding how to effectively design performance measures, to manage issues and to use incentives and disincentives to best effect.

4. Transition, Transformation and Exit.
The contract has been signed and the new arrangement needs to be implemented. This invariably requires a sophisticated approach that will move both people and assets in a seamless manner that minimises – ideally avoids entirely – any disruption to operations and impact on customers. Some projects may be relatively simple and take days or weeks but some may require massive transformational change and take years to fully implement.
It is also important to recognise that whereas transition-in will often be seen as a positive initiative the converse activity of exiting will not. What has been learned over many years is that transition – in and out – must be done professionally, efficiently and sensitively. Strategic sourcing professionals need to know how this works and facilitate it effectively. 

5. Relationship and Contract Management
The final core strategic sourcing capability area is the secret sauce that ensures the value expected from the arrangement is delivered. The IACCM surveys show that value can leak from contracts at an alarming rate averaging out at around 9% of contract value. This can swallow all a supplier’s margin or a buyer’s business case benefits. A poor contract can also create a raft of other issues around compliance, customer experience and the long-term reputation of the organisation.
At the heart of relationship and effective contract management is collaboration and trust. Strategic sourcing professionals need to understand and enable collaboration and trust super well. It involves interpersonal skills and behaviours, conflict prevention and management and enabling the emergence of a culture that drives continuous improvement, innovation, effective risk management and value optimisation. 

If you want to discuss training Strategic Sourcing Professionals in your organisation call Chris Halward at RQV Learning on +44 (0)7879815122 or email him at chrish@rqvlearning.online

Programmes can be tailored to meet your needs either as an open or in-house programme covering one or more of the  Strategic Soucing topics