SIG Speaks Blog

7 Sourcing Business Models to Improve Sourcing Effectiveness

Sourcing Business Models

Very few companies operate today without external support from third parties. Whether they are providing services, such as catering or cleaning, or specific parts necessary to manufacture products, most companies rely on outside suppliers in some capacity. For years, many organizations treated suppliers like nameless, paper-based transactions, designed to get the best price and little else. Over the past decade or more, much research has been done that supports a fundamentally different approach, one that embraces the idea that more can be gained from suppliers if the agreements are collaborative and based on output or outcomes – if they are seen as “relationships” and not “transactions.”

This article outlines seven sourcing business models that organizations should consider to improve their sourcing effectiveness and get the best results from supplier relationships.

Key Concepts to Improve Sourcing Effectiveness

Nobel prize winner Dr. Oliver Williamson laid some of the groundwork for the business models with 10 key lessons that contribute to more effective sourcing agreements.

1. Look at sourcing as a continuum, not a final destination
2. Develop contracts that create mutual advantage
3. Identify all costs, including transaction costs and their impact on risk and price
4. Understand that the greater the bilateral dependencies, the greater the need for preserving continuity
5. Use a contract as a flexible framework, not a legal weapon
6. Develop safeguards to prevent defection
7. Minimize transaction costs with shared visions and predicted alignments
8. Be credible – your contracting “style” matters (read: don’t strong arm your suppliers)
9. Build trust – leaving money on the table will come back to you in spades
10. Keep it simple

Mary Zampino, Vice President - Content, Research and Analytics

SIG Speaks Weekly Briefing - September 16

Here's your weekly update on the latest thought leadership, networking events and training with SIG. 

Artificial Intelligence and Its Impact On Procurement and Supply Chain

Read how GEP is breaking down some of the essential AI concepts and showcasing the game-changing applications that they believe are most relevant in procurement and the supply chain.

Learn Essential Capabilities for Modern Procurement and Finance

Most procurement and finance organizations struggle with data quality and visibility. Even the most sophisticated teams still find themselves stuck in a reactive mode. This eBook explores some of the technology trends and business practices that are helping to define a new, strategic role for procurement.

SIG University

SIG University is actively enrolling now for classes starting on September 30th. This is the last semester to attend before tuition increases in 2020. Students from companies like Symetra, TD Securities, Lincoln Financial Group, Microsoft, Bank of the West, Adobe, Florida Blue, Travelers, MUFG Union Bank, IBM and many more have been certified. Download the Curriculum Guide!

Hailey Corr, Content Manger

Navigating Hype, Myths and Realities of Cognitive RPA

Excitement continues to grow around the capabilities of applying automation to various business processes, particularly using robotic process automation (RPA). The enthusiasm is appropriate because early initiatives to automate rote, low-level tasks have seen very positive results with high levels of automation achieved, which frees up staff to spend time on higher-value, more complex tasks.

Low variance, rote and simple tasks have been the primary focus for the majority of RPA projects because they are easy to define and the complexity related to handling different types of exceptions can be avoided. According to AIIM’s 2018 report titled, “Enhancing Your RPA Implementation with Intelligent Information,” the top processes across different functional areas include well-defined processes that operate on structured data. The report highlights processes such as inventory management, payroll, order management and records processing, all of which benefit from standardized data and straightforward tasks. The result is close to 100% automation.

Automating Key Activities

As most organizations become more adept at process automation using these tools, attention starts to turn to processes that involve key activities within an organization. Processes involving customers need to be sped-up and more convenient. Processes involving the delivery of products and services need to be better controlled and accelerated. It is not just about automating tasks to lower costs. In the same AIIM report, it found that organizations see RPA technologies as a way to deal with reducing errors within processes while at the same time, improving data quality and customer service.

Greg Council, Vice President of Marketing and Product Management

School’s in Session for Sales Professionals

As a sales professional, I never thought to learn another profession’s language to get ahead of the game. I am not talking about native language, but about industry language. While we may all speak the same language in corporate America, we often don’t understand what the other is trying to say. 

When you go to the doctor’s office and receive a diagnosis, or when you try to understand what your bill says after getting a check-up, tune-up, court appearance or whatever it may be, we don’t always speak that specialized language and have to get someone to translate. It is frustrating, to say the least. 

Sales professionals work with all kinds of industries, companies, people and cultures. Whether you work with lawyers, doctors, biologists, mechanics or procurement, they all have their own unique language. I’ve worked among CTOs, CIOs CEOs, VPs and the like, and while I consider myself a very good salesperson, I wasn’t always speaking their language, which cost me closing deals.   

A little over a year ago I started working with Sourcing Industry Group (SIG), which provides thought leadership, training and networking opportunities to executives in sourcing, procurement, outsourcing, shared services and risk from Fortune 500 and Global 1000 companies. I admit, I hadn’t worked with many people in procurement, supply chain or sourcing, but I had sent many RFPs, RFQs and contracts through procurement departments that never received a response, feedback or anything, which further compounded my frustration. 

Brie Pritchard, Director of Business Development, Sourcing Industry Group

SIG Speaks Weekly Briefing - September 9

Here's your weekly update on the latest thought leadership, networking events and training with SIG. 

Artificial Intelligence Use Cases: Identifying and realizing the real value

In recent years, the procurement function has embraced the idea of Artificial Intelligence (AI). As organizations are getting serious about leveraging the technology, an attempt is being made to understand its applications. Download this free eBook to gain insight into how AI can transform your daily practices.

Reserve your hotel room today!

SIG has reserved a block of rooms at the Omni La Costa Resort & Spa at a discounted rate of $285 per night plus tax. The deadline for booking reservations is TOMORROW, September 10. Reserve your room today and avoid the chance of not getting this discounted price or even worse, not getting a room onsite. Rooms in the block are filling up fast!

SIG University

Join an elite group of graduates and enroll in a SIG University certification program before tuition increases in 2020. The programs can be completed entirely online so you don’t have to spend critical time away from the office. 

Hailey Corr, Content Manger

SIG Speaks Weekly Briefing - September 3

Here's your weekly update on the latest thought leadership, networking events and training with SIG. 

This Month at SIG

Make some time in your calendar this month to benchmark with your peers, find solutions to your biggest challenges or upskill your team with a SIG University certification.

Benchmark & Optimize Your Spend Strategy

Gain exclusive access to a chapter highlight from Coupa’s annual benchmark report, where they look at 3 KPIs across the source-to-contract process to gauge your organization’s progress and optimize your spend strategy.

Future of Sourcing Articles

Carlos Melendez discusses the benefits of using offshoring and nearshoring to aid in the implementation of AI into your organization.

The first installment of this two-part article underscored the importance of collaboration between procurement and IT operations. Part two of the continues with more emphasis on collaboration, but in this case, the collaboration is in terms of working with your IT colleagues.

Northeastern Regional SIGnature Event

On November 14 in Toronto, Ontario join sourcing industry leaders for a day of networking and thought leadership!

Hailey Corr, Content Manger

This Month at SIG – September 2019

What's happening in September at SIG.

The Labor Day holiday in the U.S. marks the official end of summer. Playing catch-up and circling back with everyone you got an out-of-office email from is a laborious task in the quest to achieve “inbox zero.” Hopefully you had the opportunity to hit the refresh button yourself this summer so you can approach your task list (and your goal list) with renewed energy.

This month, SIG has some exciting networking opportunities so you can benchmark with your peers and find solutions to your biggest challenges, and you have one last opportunity to upskill your team before tuition increases for our certification programs. Here’s what’s happening in September.


Last Chance for SIG University Introductory Pricing

Go into 2020 with a globally recognized certification that demonstrates your skills, expertise and professionalism. SIG University’s last semester for this year begins on September 30 and tuition rates are increasing in January. Get yourself or your team certified now at the lowest possible cost!

The programs can be completed entirely online and are available on-demand, so you don’t have to spend critical time away from the office.  

Stacy Mendoza, Digital Marketing Manager

SIG Speaks Weekly Briefing - August 26

Here's your weekly update on the latest thought leadership, networking events and training with SIG. 

Book your room for SIG's Fall Executive Summit today!

SIG has reserved a block of rooms at the Omni La Costa Resort & Spa at a discounted rate of $285 per night plus tax. This is a limited time offer and the cut off for reservations is September 10. Reserve your room today and avoid the chance of not getting this discounted price or even worse, not getting a room onsite. Rooms in the block are filling up fast!

Last chance for big savings!

This is your last chance to enroll in a SIG University program before tuition increases in 2020. The programs can be completed entirely online and are available on-demand so you don’t have to spend critical time away from the office. Enroll by September 3 to save 10% on tuition and lock in the introductory tuition rates before prices increase in 2020.

Future of Sourcing Articles

Work can often be overwhelming. Dominic Irvine gives ten tips to help you cope with pressure at work.

Hailey Corr, Content Manger

SIG Speaks to Kate Renwick-Espinosa

Kate Renwick-Espinosa headshot over the property of the Omni La Costa Resort hotel

Kate Renwick-Espinosa is the President of VSP Vision Care, a national not-for-profit vision company. At SIG's Fall Global Executive Summit, Kate will highlight how organizations can adopt a culture of fiscal fitness through impactful activities, engaging content pushed through a variety of communication channels, and a tighter alignment between leadership and different groups. Leveraging more than 27 years of optical and leadership experience, she’s energized by helping people see and feels fortunate to work for a company with similar “care and service” values. She’s accountable and committed to growing VSP membership and product and service offerings to meet diverse consumer needs and VSP’s client base.


Can you share a little more about your day-to-day role and responsibilities as the President of VSP Vision Care?

Helping people see is what motivates me every day. My primary focus is to help lead the direction and key efforts for the company that continue to grow and strengthen our VSP membership. This means we’re aligned and structured to be wherever the customer is making their vision care “purchase” and “care” decisions.  Our product and service offerings must meet diverse and personalized consumer needs as well as VSP’s client base both domestic and international. And, they must be straight-forward and easy to use!

I also work closely with our CEO, and entire leadership team, to ensure our growing company is connected and supporting our common goals and essentials as well as delivering a consistent and competitive marketplace presence. Together we ensure that when we all show up to work that we clearly understand where we’re trying to get to and how we make a difference. Collectively across our six lines of business, we’re delivering the kind of personalized eye care experience that creates members for life!

Stacy Mendoza, Digital Marketing Manager

Vendor Risk Management: A Proactive Approach

Colorful blocks that spell risk

SIG University student Hanne McBlain enrolled in the Certified Third Party Risk Management Professional (C3PRMP) Program while working at Information Services Group. She shares what she learned from her own experience with a data breach and how she is taking a proactive approach to IT vendor risk management to mitigate future business disruptions.  


In times of cost-cutting, vendor management functions that include third party risk are often the first to go or be significantly reduced. Many senior executives fail to see the value these functions bring and are usually happy to cover third party risk as part of a general risk function.

Stakeholder Support is Critical

I previously worked for an organization that prided itself on not relying on third parties for any critical functions. Redundancy was abundant and built into every platform, and on the surface, there was not much to worry about when it came to third party risk.

During my time there things started to change. We convinced the organization to implement a third party risk management framework. But with no experience in this area, we were fighting an uphill battle. We managed to win support and quickly implemented standard due diligence and on-going monitoring of critical suppliers. The business stakeholders generally regarded the added due diligence and tracking as unnecessary and bureaucratic.

Hanne McBlain, Director - ANZ Managed Services

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