Gulf News : Evolution in Global Sourcing: Challenges Ahead

Evolution in Global Sourcing: Challenges Ahead

 

By Dr. Sathya Menon

Procurement professionals have come out of obscurity and into mainstream business. As a function, global sourcing has evolved through a series of challenges, growing from a minor function within finance or operations, to become one of the most important components of modern corporate management.

Procurement competence has taken a more strategic approach because the way we do business has changed. There has been a natural strategic business evolution from purchasing to sourcing to strategic procurement to supply management in the last 10 - 15 years.

 Two enormous changes have revolutionized the face of procurement. First procurement has become deeply intertwined with business strategy. Rather than simply functioning as a standalone business unit, procurement managers and directors are now coordinating their purchases with senior executives to ensure that the company strategy is implemented across the board.

 

The second change in procurement that has entirely changed its character is the rise of e-Procurement. Whereas before procurement professionals worked over the telephone, compiling information as they went, they are now able to document information online, gaining access to far more information that allows them to make more effective decisions both at the level of cost and at the level of strategy.

Many companies have moved beyond the most basic stages of procurement maturity, often adopting strategic sourcing, category management, Supplier Relation Management tools to add value to the chain.

There are four generic strategies for managing global sourcing risk: network re-engineering, collaboration, agility and a risk management culture. All procurement professionals need to understand and guard against these risks by putting together an effective plan in place.

Studies show that while most procurement managers are aware of the risks their companies are exposed to, they are unable to implement risk management strategies, in most cases these strategies are either not implemented at all or in an ad-hoc basis.

 

Handy Hints

• Procurement competence has taken on a strategic approach
• Procurement itself has undergone a business evolution
• Rise of e-procurement has completely revolutionized the face of procurement professionals.