What you May be Missing
Too often, strategic sourcing initiatives are far better at identifying potential savings than delivering real savings that clients can actually measure. Real results often bear little resemblance to projected savings – with shortfalls exceeding 20 to 30% in many cases – and with process erosion occurring in as little as nine months.
Let those numbers sink in for a minute … because they mean value not delivered.
Sourcing and Procurement consultancies often fail to deliver on promises of savings for many reasons such as the inability to estimate day-to-day procurement demands, lack of practical knowledge in sourcing of materials and inexperience in managing supplier relationships. Expanding procurement categories to try to completely cover spend, or using increasingly esoteric metrics just adds complexity rather than quality to the task – and, you can’t manage what you can’t measure.
Activity does not mean execution. Too often, strategic sourcing efforts focus on the activity of the sourcing analysis versus executing on the results that strategic sourcing is intended to deliver. The fact that many sourcing analyses consistently miss efficiency and savings targets demonstrates the need for deep expertise at all phases – from identification of potential savings through execution – for clients to maximize savings and efficiencies.
To illustrate this point, imagine you’re building a new home for your family. You hire a well-vetted architect to make sure that the design meets your aesthetic and functional needs. Once you approve the design, it is safe to say that your next step isn’t to buy materials from the local home center and begin construction yourself. Instead, you hire experts (carpenters, plumbers, etc.) to implement the design to ensure that you get the house you wanted.
Too frequently, however, companies hire consultants to identify potential savings, only to take on implementing the plan themselves. Having the right internal resources is critical to success, but it is also prudent to work with complementary external resources who are truly vested in and capable of meeting and exceeding the desired outcome.
In addition to applying the right resources, companies need to keep pace with increasingly rapid changes in their markets. Likewise, for procurement outsourcing to be truly effective, outsourcers must also keep pace with changing demand by using best practices for measuring success, such as increasing enterprise value, providing price point protection, increasing speed-to-market and revenue productivity, all while helping clients to have over-the-horizon visibility as to what’s coming next.
LogicSource has such a model, grounded in executing customized plans that focus on these metrics, while delivering traditional measures of process improvements and savings. We specialize in optimizing indirect sourcing and procurement. Why? Because many companies do not have the time or resources to manage what can amount to 25 to 30% or more of their total spend. And, LogicSource offers the opportunity for them to unlock real value for their enterprise in the form of scalable/repeatable savings and efficiency for a signicant part of their run-rate costs.
Unlike most strategic sourcing approaches, LogicSource’s value proposition is grounded in execution. We begin by identifying savings potential via our Mutual Value Assessment (MVA), a thorough evaluation of our client’s sourcing and procurement operation – at our own expense. We then maximize initial savings potential (typically 15-30% include), and using our process models and OneMarket technology, build the sourcing and procurement platform to sustain those efficiencies and savings over time.
We hit the ground running with our onsite resources and subject matter experts working day-in and day-out to ensure that our clients fully realize the efficiency and savings that we mutually agreed we would attain during the MVA.
Our proprietary OneMarket technology automates the entire procurement process, driving efficiency and providing full transparency throughout the procurement lifecycle. OneMarket provides the basis for making smarter decisions, delivering added speed-to-market and improving the sourcing and procurement process over time.
So, why LogicSource? Because you’re serious about ensuring your indirect procurement is as good as your business needs it to be.