THE BUSINESS REVIEW FOR PROCUREMENT LEADERS
Traditionally, procurement professionals have focused on sourcing goods and services cost-effectively. But today there is also a need to look beyond that, at the other assets, capabilities or benefits that a supplier can bring to the table. Value-based sourcing seeks differentiation, rather than commonality, in supplier offerings, which means that buyers end up having to compare apples with oranges rather than apples with apples.
Allowing things to be different moves procurement out of its comfort zone and raises difficult questions, such as how to define value and how to maintain transparency in tender processes. Value-based sourcing therefore requires a change of mindset, not only in the procurement function but also throughout the organisation as a whole.
This more strategically driven, rather than process-driven, approach to sourcing
is particularly vital in industries such as pharmaceuticals and consumer goods,
where a large proportion of value is already derived from external partners.
But, as performance and value-based relationships and contracts grow in importance
in many sectors over the next few years, procurement functions will need to
develop the skills needed to manage them or be prepared for their influence
to shrink.
