Rapid sourcing gives manufacturers the tools and techniques to be more flexible without undermining the relationship that they have with their suppliers.
Sole Source Categories
When there is only one supplier who can deliver a product or service, there are many steps in the traditional strategic sourcing approach that are no longer necessary. However, there are other steps where special attention should be given. A rapid sourcing approach would reallocate the time invested for this type of category to those steps that offer the highest return, while giving the company an opportunity to achieve savings in a situation where savings are often the most difficult to deliver given the lack of leverage and “power” to influence unit prices.
The key to success with sole source negotiations is gathering total cost of ownership (TCO) data. To that end, the sourcing manager should put significant effort into understanding the TCO of the product or service being purchased. In this case, most of the time and effort will go into profiling the category. This includes:
- Extensive supplier interviews
- Market research on the product’s component costs
- Customer interviews
- Assessing product and supplier satisfaction
- Service level performance metrics.
Understandably, much less time is needed to develop a category strategy as there is little room to maneuver from a strategic perspective when dealing with a sole source supplier. Likewise, the rapid sourcing approach would invest minimal to no time in administering and evaluating supplier responses which should already be known by the time the TCO analysis is complete.
Speed-to-Value Means Speed-to-Contract
Rapid sourcing gives sourcing managers the tools and techniques to be more flexible without undermining the relationship that the company has with its suppliers. The concept of rapid sourcing remains focused on a partnership between the company and its suppliers. In some cases, deviating from a rigorous and lengthy traditional strategic sourcing approach to a rapid sourcing model can be used to increase your leverage when negotiating with suppliers.
Most suppliers will prefer a process that focuses on “speed-to-value” because it means “speed-to-contract.” Encourage your sourcing managers to think outside the box and leverage rapid sourcing to the company’s advantage. Regardless of your company’s goals for strategic sourcing, leveraging rapid sourcing techniques is a great way for your sourcing managers to become more efficient and effective.
Cory Olson is the director of supply chain at RAS & Associates, a Denver-based strategy and management consulting firm. He has more than 17 years of supply chain management and global procurement expertise in both consulting and corporate settings, and is currently leading a supply chain initiative for a $10 billion energy company focused on strategic sourcing, capability development and procure to pay (P2P) process improvement.
Greg Tilley is a consultant at RAS & Associates with more than 18 years of experience working with companies around the world to streamline their supply chain and IT processes. He has extensive project and program management expertise and has developed and delivered training and education courses related to a range of topics including project lifecycle management, software training and rapid sourcing methodology and practices.
