Smart Sourcing: The New Normal

In business today the active noun “sourcing” often is preceded by one of a growing collection of adjectives: “global”, “strategic”, “crowd”, “multi”, etc.

However, each of these design models and potential pairings is built upon a single premise―no matter how capable each of us might be, in this day and age we simply cannot be successful alone. Consequently, we must all engage in the continuing practice of uncovering, assessing and employing effective suppliers for our goods and services.

There is a lot riding on this. As with any team-building exercise (and this process clearly is that), we are only as good as our weakest link(s). Given today’s competitive environment, extreme care must be taken to assure that these important associations are well built, well measured and well managed. They must also be geared explicitly toward extracting full quantifiable corporate value from the relationships themselves. As a result, it seems very appropriate that yet another adjective must now be added to the equation, “smart”.

Core Competency

Without question a must-have core competency for CIOs today is the ability to extract full value, both tactically and strategically, from their vendor community.
In that context smart sourcing is indeed very different. However, it is not all that mystical. It begins by remembering the underlying element of any successful well balanced relationship is a true commitment to a win/win result.

It also begins by remembering that relationships are dynamic and require ongoing attention. Being “smart” once will not do, you have to be “smart” on an ongoing basis. If anyone somehow still expects a paint-by-numbers script that they feel will quickly and predictably lead them to a sale or implementation, show them the door.

As a former Fortune 100 CIO, the often-overused word “partner” means that my providers and I will be equitably sharing cost, profit, risk, information and resources, for the purpose of a defined mutual benefit. In pursuing that mutual benefit, behavior matters. In today’s highly time-compressed world of many moving parts, top-tier CIOs will not allow themselves to be subjected to cursory vendor fly-by’s that do little to reduce the complexity in their complicated lives.

Vendors must have done their homework, must always be straight-forward and honest, must be innovative and creative, and must be willing to invest the time needed to ultimately be seen as credible and value-focused if they want to do business with me.

They also must be proven strategic thinkers, driven beyond the superficial quarter-end “deals” and flashy enticements. Similarly, and once again in the spirit of true partnership, I then also know that I, too, will have to behave in the same way. Anything less on either side of the table is unacceptable, non-productive and unneeded.

Simply stated, a smart sourcing environment boils down to having (a) a clear vendor management strategy, (b) an associated underlying vendor management program and value-based metrics, and (c) a solid and effective process for initiating, educating, incenting, rewarding and terminating those relationships themselves.

Six Steps

Here are a half-dozen behavioral tips and must-have principles that will help move you more productively down that path toward smart sourcing, as adapted in part from the leadership philosophies of Tom Malone, Leadership in Games and at Work:

1. Develop, and similarly expect of all parties, the ability to make sense out of unclear or ambiguous situations. This means that the “new normal” behavior for you and your associated vendors will be based on the ability to see your respective (and collective) worlds in new ways, unencumbered by what is or what was, and instead challenged by what could be. As Marcel Proust once said, “The real voyage of discovery consists not in seeking new landscapes, but in having new eyes”.