E-Sourcing Forum » The Stockholm Syndrome

The Stockholm Syndrome – Sourcing Style

June 19th, 2007 at 05:11am David Bush - Iasta

I read a great opinion piece in ELP by Sven-Anders Stegare (what a cool name too), CPO of SEB Group in Sweden. His comments are laced with common sense and you can almost see the battle scars earned from years in the procurement trenches.

He describes how the attention is focused on direct materials and key suppliers until one day, the white knight consultant hits the door with ideas for managing indirect spend and reducing suppliers. At that point, CPOs are confronted with various decisions to address these indirect problems which he generalizes in a very entertaining way.

Option 1 – The Big Bang: This is where you bring in an army of consultants steamroll everything in their way and pull down big savings numbers but all the procurement people ignore the results and none of the savings is implemented.

Option 2 – Old Fashioned Desk Strategy: Here the CPO writes in very tough and detailed procurement policies with threats of blacklists or worse. Executives love the hardliner approach but you will likely be run out of town before the plan ever hits its milestones.

Option 3 – The Big Knife: You lose all confidence that existing staff can perform so the entire group is outsourced to a 3rd party. Headcount is slashed and but the vendor has the same problems of talent management as you had originally and now they are keeping a percentage of the savings.

Option 4 – eTools: Implementation of eProcurement and eSourcing across the board gives a total S2P ecosystem…purchasing Utopia. Except, compliance is weak and the software tools are too complex with no plans for successful roll-outs and become shelfware.

Whats left? Is there no hope? There seem to be no bullets left in the chamber. However, I completely agree with Sven’s conclusions. The danger from these approaches is in trying to let just one of them solve all the problems. Having the right people in place, identifying and triaging the problems and addressing them systematically with a variety of strategies will result in the best and most long lasting success.

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Entry Filed under: General, Interviews, Supply Management Best Practices, Technology / SaaS

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