Sourcing Has Gone Mainstream

And like that, another one is behind us. For months we plan every little detail to make our Summit a memorable event for our delegates. We coach speakers, edit session presentations, order matching linens, create signage and think through every thing that can go wrong to make sure that it doesn’t. And then it’s over.  Just like that. The delegates have gone home, the sessions have been evaluated and everything has been shipped. But the memories of the event linger and one thing has become more and more clear with each passing event…the sourcing function is no longer back-office. It has not just gone from tactical to strategic, but is also leading companies in tackling some of the biggest issues facing our members today. Sourcing has gone mainstream. These observations from the most recent SIG Global Executive Summit highlight these points.

Data is the word of the day. And I don’t just mean “Big Data” although that is certainly a “big” part of it. Data is the key to better understanding customers. It is the way we can predict future supply needs. And yes—using “Big Data” we can teach computers to replace even complex procurement functions with little to no errors. But now Procurement groups are also hiring Data Scientists to turn that data into tangible outcomes. The baseline for smart systems is getting the data right, so pay attention…you will see the Data Scientist trend on the rise.

Security blankets don’t really exist. As one of our keynote speakers recently said, “there’s no such thing as security…or cyber” so don’t think that by having it on the C-level agenda means that it’s under control. Many data breaches come in through third party vendors…but they are generally inside systems for over six months before it’s even discovered that the breach has occurred. And according to an Infosecurity Magazine article, 69% of the time, those breaches are exposed by a third party as well and NOT the company that has been hacked. Which leads to the next aha moment…

Managing risk is everyone’s job. Needless to say, the sourcing group is at the heart of risk mitigation. With firsthand vendor relationships, no one is better poised to understand the complexities in working with third parties. It is not just a Risk Officer’s job to communicate and govern these relationships, sourcing is at the very pulse and is more often playing a leading role.

Contingent workers are becoming an employment strategy. Total talent management is a hotbed issue and the growth of the independent workforce brings challenges across the board. The sourcing group is in a unique position to partner with HR on self-sourcing talent and with increased awareness of labor rate negotiations can influence significant cost savings.

All in, I’m always astounded by the idea that the sourcing group (once referred to as “purchasing,” which explains the transactional bent) has ever been considered anything other than strategic. Who other than this group has insight into every line of business? Who else can influence product and service decisions before they are even made? More and more we are seeing procurement with a seat at the board table…and rightfully so! It should be a no-brainer, yet it isn’t always the case. Although CFOs are universally considered the #2 person in most companies, 60% of CPOs (according to a benchmarking study SIG and Oliver Wyman conducted) are within two levels of the CEO, many reporting through the CFO. Isn’t it time we let the rest of the world in on the secret that sourcing is not just mainstream…but can have a massive impact on both bottom-line savings AND top-line growth? Sourcing is one of the most strategic departments in any company…it’s time we get the respect we deserve, a seat at the table and a line directly to the CEO.