Strategic Sourcing Practices in Higher Education (White Paper)

Posted on January 28, 2008


Who Can Benefit from this Paper?

While the title emphasizes a focus on Higher Education Institutions, in reality the concepts and methodologies presented in this white paper can be easily adapted to any environment or business sector.

White Paper Excerpt from Strategic Sourcing Practices in Higher Education

What is the Correct Definition of Strategic Sourcing?

Based on a contract creation/compliance management framework traditional thought leaders have historically promoted what is now referred to as Strategic Sourcing as the lynchpin of an organization’s procurement practice. The belief that an enterprise-wide adherence to process centralization was the only way to achieve true savings was also the impetus behind the simultaneous introduction of vendor rationalization and transaction reduction as key elements of the strategy.

While there are certainly instances in which this combined approach will deliver savings, it is not necessarily the best approach to take for all commodity type purchases.

With studies by organizations such as IDC confirming that 85% of all e-procurement initiatives fail to achieve the expected savings there is a growing belief that the traditional definition of Strategic Sourcing does not reflect the way in which the real-world actually operates. As a result organizations are now beginning to examine factors such as the impact of commodity characteristics on the procurement cycle more closely.

With the emergence of new revelations such as the one referenced above it is becoming increasingly clear that the broad application of a Strategic Sourcing strategy (let alone any strategy) as traditionally defined in the 2004 Rethinking Processes report, is not conducive to achieving sustainable savings.

Unfortunately, and as demonstrated by a number of recent studies, there remains a handful of mainstream players from within the software, consulting and even association communities that continue to advocate a traditional enterprise-wide approach to Strategic Sourcing. The reason for this steadfast commitment to a “shrinking ideal” appears to be based more on self-preservation than operational gains.

Document Outline: 21 Pages, Plus Appendices

Main Sections: What is the Correct Definition of Strategic Sourcing?, Developing an Effective Framework, Obstacles to a Successful Initiative, The Impact of Commodity Characteristics, The Inherent Dangers of a Pull-Through Strategy, The Myth of Transactional Reduction, A Strategy of Order (Murdoch University), A Study in Contrasts – Seeing Beyond the Org Chart, The Importance of Sustainable Savings and the Emergence of SaaS, NYCDOE 2004 – A Case in Point, NYCDOE 2007 – (Update), Murdoch 2007 – (Update), A Brief Note Regarding the Procurement of Services

Appendices: Rethinking Processes: Reducing Costs and Maximizing Resources in Education (Report), Succeeding in a Dynamic World: Supply Management in the Decade Ahead (Report), Acres of Diamonds; The Value of Effectively Managing Low-Dollar, High Transactional Volume Spend (White Paper), Murdoch University (Case Reference), Case Study 4 (Procuring Services)

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