Sourcing & Procurement – Key Components of Your Vendor Management Program

Sourcing and procurement are both important business disciplines that oftentimes get mingled together. However, both of them are important activities that enable organizations to proactively and responsively address business needs, while concurrently managing costs, risks and compliance.

We recently sat down with Joe Payne, VP of Client Services at Source One Management, to discuss a variety of emerging trends and best practices in procurement and vendor management. Source One is a consulting firm that focuses on supporting strategic sourcing and procurement for their clients, and Joe is a leading thinker on the topic of procurement transformation.

One of the first topics we discussed was the difference between procurement and sourcing, and why it’s important for successful companies to have a vendor management program that incorporates both.

“Ultimately, the value proposition that sourcing and procurement bring to an organization has more to do with innovation and risk management than simply controlling costs,” said Payne. “Procurement, as it’s traditionally thought of, is no longer just about compliance. It’s about how you thoughtfully engage with suppliers, in a process-driven way, to create a competitive advantage.”

While procurement and sourcing are oftentimes thought of as a singular function, they are actually quite different and require different skill sets. “Sourcing is more strategic. It focuses on understanding the business need and the purpose it serves, and then determining the right approach to sourcing that that need,” said Payne. “Procurement, on the other hand, is more tactical. It requires following a disciplined approach to developing requirements, managing solicitations and analyzing results to make the most informed decision when selecting a new vendor.”

Organizations need to have both a strong sourcing and procurement function (with the appropriate skill set for each) to address the strategic and tactical issues associated with making the best decision for acquiring goods and services.

Hear more from our conversation with Joe Payne by listening to our podcast titled Strategic Sourcing and Procurement with Joe Payne, Source One Management!
Author:

Job Title: CEO
Organization: Vendor Centric

Tom is the founder and CEO of Vendor Centric, he has been a trusted advisor to nonprofit organizations for 30 years, with a focus on helping them align the right people, processes and systems to mitigate third-party risk and drive more value from third-party contracts and relationships.

Contact us