My 13-year-old son has a new favorite saying: “Is it, though?”
I’m not sure where he picked it up, perhaps at school or on YouTube. Regardless, now on a regular basis, if I say something even fairly straightforward like “broccoli is good for you,” he’ll tilt his head to approximately 45 degrees, squint his eyes as if deep in thought, and respond, “Is it, though?” It’s a solid tool in his teenager toolbox. It also drives me bananas.
However, it’s this exact response that comes to mind in the sourcing world when it’s time to revisit a category strategy. It’s a phenomenon I’ve seen as both a procurement leader and consultant—when a contract is due to expire, a category manager may assume that it’s time to renegotiate, extend the agreement or go back to the market with a new RFP.
But is it, though?
By moving directly to sourcing , we are essentially picking up the program in the middle of the path. We lose sight of key stepping stones that assess whether our larger strategy should continue forward as is, or if business needs, market dynamics or other factors will require us to change direction. Contract expiry is a useful milestone that, instead of triggering a re-sourcing exercise, should remind us to go back to the beginning, so to speak, retracing our steps to make sure our trajectory is still bearing us to our intended destination. And along that journey, the following elements are important ports of call:
Performance to Goals — your category strategy likely began with goals in mind, whether short-term or as part of a 3-5 year vision. Now that you’ve likely spent a few years in motion with your chosen solution, it’s a good time to assess where you are against where you planned to be by now.
Desired End State — as a companion piece to the question above, has the end state you originally mapped out changed during this time? With so much flux across category areas right now, it’s an important question to consider. Things are moving rapidly, and it’s quite possible that the target you envisioned a few short years ago is no longer the right glass slipper for your organization.
Business Needs — the sourcing strategy you originally executed was built to meet a series of business needs all along the AQSCIR continuum. Just as your desired end state may well have changed, it is quite possible that some of those business needs may have similarly evolved over time, perhaps in ways that will further inform your go-forward plan.
Cost — Even though this element of AQSCIR is indicated above, it bears repeating. Inflation, COVID, supply chain issues and other factors may very well have caused your financial needs to shift. Re-assessing both your business requirements and strategic options before you go back to market may not only be wise in this scenario, it may also be critical to meeting the demands of a strapped budget.
Market Dynamics — holding the mirror up to your internal organization is important, but just as critical is the exercise of taking a fresh look at what’s happening outside the four walls of your company. The last few years have brought about significant disruption across industries, suppliers and category areas, resulting in both scarcity and innovation in equal measure. Now more than ever, a strategy refresh must involve a meaningful survey of what’s happening in the market.
Sourcing Strategy — Understanding and agreeing your strategic path forward—whether that be RFP, direct award, in-sourcing, or not sourcing at all—is dependent on each of the questions above. Once you have revisited performance, desired end state, business needs, and market dynamics, it’s time to re-assess the way forward. Perhaps this does result in a contract extension or re-sourcing effort. Conversely, the right answer might be a different approach altogether, one that best meets the current state of your business and its unique needs right now.
This is just a small sample of a much larger topic. Feel free to review our insights for additional perspectives on sourcing and category strategy. Do these points resonate with you? We invite you to join in the discussion on LinkedIn and share your perspectives. Let’s keep the conversation going!