By Rebecca Langdon
There are a few slightly different versions of the procurement cycle or strategic sourcing process. However in most cases the cycle depicted has 7 key steps and in this article each will be explained.
Step 1: Category assessment
If you imagine the category as being all of the spend that you have responsibility for. For example you might be an IT Sourcing Manager for a firm in Jordan managing a spend of 10 million JOD. The assessment would entail reviewing the spend profile and all of the contracts to look for any opportunities.
Step 2: Requirement definition and scope
One you have an idea of potential opportunities, or perhaps new requirements, you can start to produce a scope. For example perhaps the firm has a contract for 50 blackberry devices but there is a business requirement to move to iPhone. We will carry this example through for the rest of the article.
Step 3: Strategy development
You need to now look at the detail of the current relationship with the Blackberry provider, for example do you have a termination clause you need to execute. You will then need to design the sourcing process you plan to undertake. Perhaps you will conduct an RFI and then an RFP, or maybe there is only one suitable vendor so a competitive process is not applicable. This is the point at which best practice would be to pull together a sourcing document which explains the strategy you plan to execute, and why.
Step 4: Strategy execution
It is time to execute the strategy you developed.
Step 5: Negotiation and contract award
This step covers final commercial and contractual negotiations with the supplier of choice.
Step 6: Implementation and transition
You should have already been considering the implementation plan and the transition from Blackberry to iPhone. This is when the users will actually give their blackberries back and be given iPhones. There will be lots of other technology details going on in the background, and you will want to make sure the new tariff gets implemented correctly.
Step 7: Supplier relationship management
Once the new iPhone supplier is in place, you need to agree how you will manage the relationship. It may be a quarterly review of the service, or more or less frequent as appropriate.
Each of the 7 steps of the strategic sourcing process has been explained. However it is important to note that not every procurement exercise will cover all 7 steps, and there are also many examples where the steps will not be linear. This is not necessarily a sign of bad practice, but designing the sourcing process to align with the business requirement. This article has only given the high level details of each of the steps, and for more information you might consider undertaking the CSCP program.