Strategic sourcing helps Levi's connect the dots

13 June 2017

Sourcing, procurement, and supply chain management are critical to the performance of the most successful companies, a study has found.

However, while procurement is far less likely now than in the past to be perceived as a back office function, many large companies still execute sourcing and procurement activities using an inconvenient mishmash of systems, the Harvard Business Review (HBR) report found.

Sponsored by Scout RFP, the report said many organisations depended on “an ungainly combination of legacy systems, spreadsheets, email, and manual processes”.

It cited another recent HBR survey of 376 senior executives that found many companies are making little use of advanced digital technologies for non-customer-facing operating activities, including sourcing and procurement.

“The lack of technological integration and automation in this area is particularly problematic given the increasing pressure to run the business efficiently,” said the report.

Cloud technology options, which can generate positive results quickly with a minimum of implementation-related risk, have the potential to offset this lack of integration.

“Leading edge technology platforms can bring together previously siloed personnel and processes, remove resource intensive and error-prone manual interventions [and] provide end-to-end visibility into sourcing projects and performance,” said the report.

It added that they could also facilitate sourcing methodology across the organisation and allow internal and external stakeholders to work together effectively in real time.

While the report notes that cost savings continue to drive procurement strategies, practitioners say these savings are just the tip of the iceberg in terms of the impact that sourcing can bring to the enterprise.

“It’s not just about cost savings – which was the traditional mind-set of the procurement function,” said Neil Aronson, head of global strategic sourcing at Uber Technologies. “It’s about continually improving and re-evaluating how we’re buying to make sure we’re getting the best outcomes.”

Sourcing professionals can bring deep market insight, expertise in negotiating and managing supplier agreements and a wide view on supplier relationships across the company’s business lines.

Dean Edwards, vice president of global strategic sourcing at Levi Strauss & Co, said: “We get to see an awful lot across the organisation and can help make connections throughout the various parts of the enterprise.

“If we see one function undertaking a project, and a close parallel somewhere else in the company, we’re able to connect those dots so that those stakeholders have visibility into what’s going on.”

This might mean separate teams, engaging in parallel activities, can pool resources and buying power to come up with a sourcing approach that benefits the enterprise as a whole.

“Sourcing and procurement can offer a fresh and different perspective – asking hard questions and driving a competitive environment,” Aronson adds.

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