SOURCING & PROCUREMENT SOLUTIONS
Plenty of Procurement Programs, But
Which Is Right for You?
Before investing in new programs for procurement or other functional areas, organizations
must evaluate each program thoroughly as implementation can be a time-consuming and
expensive process. However, in many cases the long-term benefits may compensate for the
short-term pain.
—Erin Williams, analyst, and Marisa Brown, senior program manager, at APQC
articipants in APQC’s Open Standards Procurement Research have invested, or plan to invest,
in a variety of procurement programs. Currently
83 percent report that they have invested in global sourcing, 73
P
ance of existing suppliers. These evaluations ensure that
suppliers meet an organization’s requirements. One major
benefit of supplier approval programs is a decrease in maverick spending, which occurs when employees go outside
percent in category management, 63 percent in spend analysis, the formal procurement channels.
61 percent in formal supplier relationship management, and 60
Global sourcing has become a very popular way to
percent in supplier development and key performance indicator decrease costs by leveraging labor and materials from coun-
(KPI) programs. However, when you include organizations that tries with low-cost work forces. Although it may be the best
plan to initiate these programs, more than 90 percent of them will choice for an organizati on, it should not be undertaken
invest in formal supplier relationship management, supplier blindly. APQC’s research has found a number of potential
development and global sourcing.
drawbacks to global sourcing, including longer supplier lead-Supplier relationship management is a critical, interde- times and fewer orders received on time.
pendent aspect of procurement; an organization cannot fix the
processes inside its boundaries without getting everyone in the
The Outlook
chain on the same page. Supplier management can benefit Moving forward, APQC encourages organizations to further
from thorough spend analysis, the use of blanket/contract explore each of these potential procurement programs to
orders, and the effective use of technology.
determine whether each one is a good fit and to consider their
Focusing on supplier development and measuring per- strengths and weaknesses. It may be that the best option is to
formance with KPIs helps organizations evaluate and invest in a combination of several of the programs, as each is
approve potential suppliers and re-evaluate the perform- likely to help solve a different problem.
