Mary Zampino's 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

Best Practices and Resources for Presenting at Industry Events

A man gives an industry presentation to an audience.

Presenting at an industry event is an important step in any professional's career. It is also an excellent opportunity to promote, showcase and reward a team for a job well-done. But most importantly, it is a critical factor in keeping an industry relevant, competitive and strong. Every professional worth their salt should consider it their duty to share their successes and failures.

Of course, in order to present at an industry event, you must first submit a proposal in the form of a session abstract. Sourcing professionals are well versed in writing business cases and category strategies, and we have all read our fair share of good and bad proposals. However, when it comes to writing a speaking proposal, many sourcing professionals don’t give it the time or energy it deserves. These abstracts are often used as written to describe your session, and if the goal is to share your thought leadership, you will want to make sure your abstract gets your audience’s attention. Consider the following five tips to write a compelling proposal for your next industry event.

Why present?

To write a good proposal, first define your objective for presenting to help drive the format and content. You may decide to present to showcase you or your team's achievements and thereby gain recognition. Or you may use the opportunity to establish yourself as a thought leader on a particular subject. Presenting in a room of peers or potential clients can also help you better understand the trends in your industry and the needs of your customers.

Mary Zampino, Senior Director of Global Sourcing Intelligence

Sustainability in Sourcing Part II: Sourcing's Role

An image of a glass globe in the forest.

In previous blogs, SIG has covered the basic concept of sustainability, including an overview of its various dimensions. In this post, I will touch on the role that sourcing professionals can have in meeting corporate sustainability goals.

Why should sourcing have a role?

Sourcing is uniquely positioned to contribute to meeting a corporation's sustainability goals because sourcing typically has expertise in:

  • Creating alignment to corporate goals
  • Building frameworks to measure success
  • Researching market conditions and supplier capabilities
  • Conducting strategic negotiations 
  • Designing innovative methods for value creation
  • Ranking the priorities of stakeholders with supplier offerings   
  • Identifying risk and mitigating responsibly

The reduction in costs after implementing a sustainability program can exceed the costs of implementation – in other words, you’re spending money up front but in the long run, you save more than you spend. For example, if an organization were to target the spend category of corporate services and facilities management (FM), capital may be invested in working with a supplier to install a new system that reduces energy consumption at the company's North American headquarters, but in the long run, the reduction in energy costs saves the company money – which of course, can then be reinvested.

In this example, procurement and sourcing are uniquely positioned to make this happen. Most likely Sourcing negotiated the original FM contract, understands the innovative capabilities of suppliers, has heard many recent pitches on new products, and is adept at performing the analysis that proves an investment can have a significant return in hard costs, and even soft costs.

Mary Zampino, Senior Director of Global Sourcing Intelligence

Resources for Supplier Diversity Programs

The benefits of a supplier diversity program can have lasting impacts on your community and your organization.

For those who work in any area of the supply chain, diversity is a word that comes up often. Supplier diversity or diversity in contracting are programs that can be either mandatory (i.e., requirement to fulfill state or federal contracts) or voluntary (i.e., procurement/social responsibility strategy).   

Whether your organization chooses diverse suppliers for advocacy and social responsibility reasons, to comply with state or federal regulations, or to simply meet your stated requirements and work scope, the benefits of supplier diversity can have lasting impacts on your community and your organization. 

Starting a Supplier Diversity Program (SD Program) in your organization requires input and collaboration from various stakeholders at all levels. The SIG Resource Center has a wealth of information to help you begin the process to implement an SD Program, including how to make the business case to internal stakeholders, best practices and benchmarking studies from your peers.  

Mary Zampino, Senior Director of Global Sourcing Intelligence

What Does Augmented Reality Mean for the Sourcing Organization?

Augmented reality (AR), or mixed reality, is a technology every sourcing professional should understand. It may seem tangential, but forward-thinking executives will take heed as AR will become more and more prevalent in the sourcing industry. AR differs from virtual reality in that virtual reality is a total replacement of your current reality. Augmented reality can be thought of as a digital addition, or supplement, to your current reality. A perfect example is the Snapchat face filters - which overlay illustrations on digital images, specifically faces. My Snapchat buddies send me pictures of their faces with doggie ears attached and so on. Another example is the app Pokémon Go, in which participants found digital creatures in the everyday settings of their reality - places like the park, campus, restaurants and so on. Augmented reality is a technology that can provide packaged experiences that feel real. There are two major types of applications of AR in the market today, consumer and business/industrial.

You are probably familiar with Snapchat filters and Pokémon Go, but what about the augmented reality app that helps you decide where you might place new furniture in an existing room like Ikea offers? Or how about an AR app that allows you to point your device to the night sky and interact with the stars? Or an app that helps healthcare workers find the most appropriate place to insert an IV?

Mary Zampino, Senior Director of Global Sourcing Intelligence, SIG

Getting Started with RPA

The Hackett Group, in conjunction with Symphony Ventures, recently published a whitepaper regarding Robotics Process Automation (RPA). (You may recall that Symphony Ventures conducted an excellent RPA proof of concept at the SIG 2017 Spring Summit with American Honda.) In this whitepaper, the authors provide a blueprint for selecting sourcing opportunities appropriate for RPA. Any sourcing professional worth their salt, should be considering RPA as a viable strategy after reading this statement, "Individual tasks of such processes may be fully automated with RPA, eliminating 100% of labor and up to 90% of cost. The total efficiency improvement achievable through holistic transformation using RPA across end-to-end transactional process can add up to 50% to 75% of baseline cost."

Mary Zampino, Senior Director of Global Sourcing Intelligence, SIG

So Who are the Centennials?

With a new U.S. Presidential Administration, I have been thinking a lot about the future of my little nephew, who is just a toddler now. Like other aunties, I worry about the longterm impact of current votes on our Earth, our communities and our economy. My nephew is considered a "Centennial.” I thought I'd take a moment and learn more about the Centennials and what tools they will have to combat some of these "orders" and "choices." 

Centennials, or Generation Z, are kids born in 1997 or after. They are 25% of the population of the United States (about 78 million people). Nearly 48% of them are minorities. They seem to have an excellent grasp on the challenges they face in their generation; those of decreasing environmental resources like water and increasing cultural issues like religious wars. They have learned that being different is okay. They have learned not to be too risky. However, they have also learned to adapt by working around challenges and building their own solutions. Remember, this is the first generation to live entirely with the internet. They have been surfing the web their whole lives. So this makes for a more serious, more open-minded person, albeit with a short attention span.

Mary Zampino, Senior Director of Global Sourcing Intelligence, SIG

Resolve to Better Manage Your Time in 2017

Another year is upon us and we have 49-some weeks to implement and perfect our resolutions. You have probably already promised yourself to spend more time with family, hit the gym more often, cut your carb intake and adopt a more positive attitude. These are fantastic goals, but achieving them will be difficult if you have not also determined how to better manage your time in order to accommodate these goals. Here are a few best practices and recommendations for managing your time better.     

Delete Unnecessary Email Real-time

If a message is not important or does not require follow-up or saving, delete it immediately after reading it. You do not even have to move your mouse, just a simple CTRL + D will get rid of that message (you can do this directly from your Inbox). You should also sweep your Inbox daily. Deleting unnecessary messages real-time will help that sweep go much quicker.

Categorize, Color and Document Your Tasks

Another great practice is to categorize every task you need to undertake. In Outlook, you can use the Tag feature to assign a Category (with a color code) to every email received. I have never found a to-do app that was more effective and useful than my old-fashioned handwritten list. So, as I write tasks on my to-do list, I also assign a color category to them. Regardless of how you track your tasks, as you perform each task write down how much time was spent addressing the task. At the end of the day or week (depending on the urgency of the assignment), create a color-coded matrix of how much time was spent on each task. This has really helped me understand where I waste my time and how long it really takes to complete an assignment - which is especially helpful as more urgent items arrive on my desk. This way I can project how much time I can spend on an unexpected task and still accomplish my scheduled tasks.

Take that Break

Mary Zampino, Senior Director of Global Sourcing Intelligence, SIG

How to Get the Most from your SIG Event - Part IV: The Afterlife

In the final part of this series, I have a few tips on what to do after a SIG event…and specifically after the SIG Summit…is over.

Summarize your notes. Take a few minutes on your plane ride home while it is still fresh in your mind and write one sentence for every breakout and general session you attended. Make sure write down the overall theme and include key takeaways. Identify any action items for you or your team and who might own them, including any speaker follow-ups. If you need a few reminders, look at the SIG twitter feed using the hashtag for that event. In the case of the fall Summit, we used #SIGFall13. Chances are that someone tweeted some of the key thoughts. The Summit is full of tangible and implementable ideas. Use them!

Schedule time to report your experience to your team. When a SIG team member attends a conference, we report back to our team, providing:

  • Collateral: copies of decks, checklists, takeaways, forms, templates, tools
  • Summary of lessons learned
  • 5-10 new ideas / innovative approaches / topics for brown bag lunch discussions and strategy meetings

Many members have told us that they have to take turns attending the Summit, so a report-out is a great way to share your learnings and make the whole team feel like they were onsite. If you tweet while you are at the event, they can even follow you live!

Mary Zampino, Senior Director of Global Sourcing Intelligence, SIG

How to Get the Most from your SIG Event - Part III: Content is King

After every Summit we ask the delegates to tell us the two most important factors in contributing to their decision to attend the event. Consistently the delegates cite the Summit program content and the opportunities to network. In the first part of this blog series, I summarized some best practices for networking, specifically for Sourcing professionals. In this part of the series, I will summarize best practices for obtaining the most value from the SIG Summit program content. Keep in mind, most of these also apply to other SIG event program content (like our Symposiums, Regionals, Webinars and Town Hall Teleconferences).

Before the Event:

Make arrangements to arrive early and depart late - for Summits this means come in on Monday night and plan to stay until Friday morning. The event schedule is packed and the attendees are high-level...trust me, you want to get there early and stay late.

Write a list of objectives - include the content you wish to cover. For example, you may own the Legal spend category or you may be in the process of supplier normalization or possibly building a case study for procurement transformation. Consider the industries and organizations you may be interested in hearing from...and understand the expectations of your boss and your team members...do they expect you to report your experiences? If so, how? And when?

Mary Zampino, Senior Director of Global Sourcing Intelligence, SIG

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