Sourcing 101: Step 6 – Implementation and Onboarding

Implementation is the key element of any sourcing strategy, turning plans into actionable results. Effectively managing this step can drive cost savings, reduce risks, and unlock substantial value through operational efficiency. This article explores how strategic planning, technology, and collaboration lead to a successful implementation phase in sourcing.

In previous articles, we've explored the foundational steps of a successful sourcing strategy—Define Sourcing Requirements, Market Research, Create a Sourcing Strategy, Supplier Selection and Contract Negotiation. These elements serve as the building blocks of a robust sourcing framework. Now, we’re moving into a step that is crucial for bringing that strategy to life: Implementation and Onboarding.

Imagine a blueprint for a house. Without skilled workers, tools, and materials, it remains only a concept. Similarly, a well-crafted sourcing strategy remains theoretical until executed. Implementation is where Sourcing or Procurement deliver actual value.

Remembering The 7 Steps to Building a Sourcing Strategy

Here’s an overview of the seven key steps to developing a sourcing strategy, with a focus on Step 6: Implementation:

1. Define Sourcing Requirements: Identify the goods and services needed.
2. Market Research: Analyze suppliers and the market environment.
3. Create a Sourcing Strategy: Define how you’ll achieve your goals (our focus today).
4. Supplier Selection: Choose the right suppliers based on key criteria.
5. Contract Negotiation: Set the terms for your supplier relationships.
6. Implementation: Execute your sourcing plan.
7. Monitor & Optimize: Track performance and adjust your strategy over time.

Why Implementation Matters

Implementation is the bridge between strategy and tangible outcomes. A successful implementation phase allows organizations to:

• Enhance Operational Efficiency: Streamlined processes and improved supplier performance.
• Optimize Cost Savings: Realizing cost-saving initiatives across the supply chain.
• Mitigate Risks: Addressing potential risks to ensure a resilient supply chain.
• Drive Innovation: Establishing robust supplier relationships that pave the way for innovative solutions.

Challenges in Implementation

Despite its importance, implementation brings its share of challenges:

• Resistance to Change: New processes or suppliers often face pushback.
• Resource Constraints: Budgets and limited personnel can impact success.
• Inconsistent Processes: The way processes are conducted can negatively impact the operation of a contract or the working capital of the selected supplier.
• Supplier Compliance: Monitoring supplier performance and compliance can be tricky.
• External Disruptions: Economic changes and supply chain issues pose risks to implementation.

Leveraging Technology for Effective Implementation

In today’s digital world, technology enables smoother implementation and reduces manual tasks. Key tools include:

• E-Procurement: Streamlines the procurement process, minimizing delays and reducing costs.
• Supplier Relationship Management (SRM) Tools: Improves communication and collaboration with suppliers, fostering solid partnerships.
• Contract Lifecycle Management (CLM): Automates contract processes, ensuring compliance.
• AI and Machine Learning: Analyzes data to optimize decision-making and predict potential disruptions.

A Step-by-Step Guide to Implementation in Sourcing

1. Develop a Comprehensive Implementation Plan

Define objectives and map out every phase of implementation to align with business goals. For instance, if cost reduction is a priority, identify how the onboarding of each supplier can contribute to this goal.

2. Onboard Suppliers Effectively

Integrate suppliers into your systems and processes. Set up clear channels for communication and assign roles to ensure everyone is on the same page. Consider using SRM tools to facilitate this step, ensuring suppliers understand your expectations, standards, and reporting needs.

3. Establish KPIs and Monitor Supplier Performance

Develop a framework to measure supplier performance against KPIs. For example, tracking metrics like on-time delivery, order accuracy, and compliance rate will reveal insights into supplier reliability.

4. Collaborate Cross-Functionally

Involve all stakeholders, including Procurement, Finance, and Operations, to create a well-rounded implementation process. A unified approach ensures that the strategy aligns with broader corporate goals and meets functional needs.

5. Utilize Data for Informed Decision-Making

Leverage data analytics to review supplier performance continuously. For example, if a supplier frequently delays shipments, this insight helps you address issues before they escalate, or to consider alternative suppliers if necessary.

6. Foster Continuous Improvement

After implementing and onboarding suppliers, maintain an ongoing focus on improvement. This may involve adjusting KPIs or refining processes to boost efficiency and address any recurring issues.

Roles Involved in Implementation

Each function plays a unique role in driving successful sourcing implementation:

• Procurement Team: Leads sourcing, supplier selection, and performance management.
• Category Managers: Develop specific sourcing strategies for their spend categories and manage supplier relationships.
• Legal Counsel: Ensures all contracts are compliant and legally sound.
• Finance: Oversees budgets and spending accountability.
• Operations: Coordinates with Procurement for timely delivery and quality.

Success Factors in Implementation

What makes implementation successful? These five factors make all the difference:

1. Leadership Support: Effective leadership keeps the implementation on track.
2. Cross-Functional Collaboration: Sourcing works best when all departments support the process.
3. Data-Driven Decisions: Analytics inform better decisions and improve supplier relationships.
4. Supplier Relationship Management: Strong partnerships foster reliability and innovation.
5. Commitment to Continuous Improvement: Regular reviews and updates keep the strategy relevant.

Common Pitfalls and How to Avoid Them

• Lack of Stakeholder Buy-In: Without stakeholder support, implementation can stall. Conduct regular briefings to keep stakeholders engaged.
• Resource Limitations: Optimize available resources by prioritizing high-impact suppliers and activities.
• Poor Supplier Performance: Ensure that selection and onboarding criteria match your operational needs.
• Insufficient Risk Management: Proactively monitor external and internal factors that could impact supplier performance.

Conclusion: Turning Plans into Value

Implementation is the key aspect for connecting strategic sourcing planning to operational success. By effectively executing the implementation phase, organizations can achieve a range of benefits—from cost optimization to risk mitigation and increased efficiency.

Successful implementation requires clear planning, strong leadership, and collaboration. Organizations that leverage technology and foster solid supplier relationships can expect significant returns and sustainable growth.

In the next installment of our Sourcing 101 series, we’ll tackle Step 7: Monitoring and Optimization, where continuous evaluation and improvement can further boost sourcing success. We’ll explore performance metrics, supplier management, and the role of data analytics in driving informed decision-making.

Stay tuned as we continue our journey towards sourcing excellence!

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