Procurement is the corporate function that has governance over purchasing decisions for a company. Activities of the procurement function include strategic vendor evaluation and selection, competitive bidding, contract negotiation and purchasing. Effective procurement practices enable organizations to reduce costs and maximize value.

Strategic sourcing in supply chain is a standardized and systematic approach to supply chain management that formalizes the way information is gathered and used. Strategic sourcing enables organizations to leverage their consolidated purchasing power to find the best possible value in the marketplace. To remain competitive, organizations should expand their procurement expertise beyond purchasing to include strategic sourcing and negotiation to optimize cost and risk.

Supplier relationship management (SRM) is a business initiative that many companies undertake to build mutually beneficial relationships with suppliers. Well-designed SRM programs help companies to increase collaboration by identifying the right suppliers with whom to partner. Top business drivers for implementing SRM include cost optimization, risk mitigation, top-line growth from supplier innovation, operational process improvements and preferential treatment from suppliers as a customer of choice.

Despite the business case for SRM, only 35% of sourcing & procurement leaders say they have an effective supplier segmentation model. And 77% say their organizations lack an effective process to capture and develop supplier ideas. Collaboration with the supply base and supplier innovation are key to sourcing & procurement success.

Leaders in sourcing & procurement partner with Gartner to drive better cost, quality, delivery and competitive advantage from suppliers. We offer the data-driven insights and frameworks for targeting resources to the suppliers that matter most for the organization.

Supplier risk management is the ability to assess and monitor supplier risk by tracking supplier financial performance, geopolitical risks, news sentiments, judicial filings and regulatory compliance.

Supplier risk management has been an area of underinvestment in many sourcing & procurement functions. Most companies lack competitive and dynamic supplier risk management capabilities. A reactive approach to vulnerabilities means that emerging risks and opportunities often get missed.

Turn to Gartner for help minimizing operational supply disruptions. We offer trend sensing data to help you anticipate risk events further in advance and respond faster when problems arise. We also study how winning sourcing & procurement leaders foster resilience in the supplier network, and then we share best practices with our client base.

Category strategies too often look and feel like execution plans, not strategies. It’s not surprising then that sourcing activity inconsistently yields desired business value, and that cost optimization efforts frequently become cost reduction initiatives. Gartner is committed to supporting sourcing & procurement leaders with category management: We offer insights, tools and advice for driving sourcing discipline across your business, which in turn drives supplier ROI.

It’s difficult to define and measure the impact of responsible sourcing and supplier diversity initiatives. And no wonder, since only 13% of sourcing & procurement leaders excel at identifying and onboarding diverse suppliers, and only 26% have embedded and supported supplier diversity in their organizational culture. These trends must change, and fast: The year-over-year retention rate of diverse suppliers is just 54%.

Gartner advisors can coach you in building strong relationships with a diverse supplier portfolio and ingraining responsible sourcing and supplier diversity into organizational culture. We work with companies regarded highly for their responsible sourcing and supplier diversity success, and then we document their best practices so that other organizations can adapt.

According to Gartner research, only 6% of senior business leaders rate sourcing & procurement among the top three corporate functions with digital potential. Articulating the value and impact of transformational technologies for sourcing & procurement can be difficult, but ultimately technical and culture barriers are holding back the digitalization of the sourcing & procurement function. 39% of sourcing & procurement leaders say their company culture is resistant to the change required to implement digitalization.

Gartner can help: We have the technology expertise needed to select the right technology solution for your sourcing & procurement organization, and drive cost savings and productivity improvements from the system.

It’s critical that sourcing & procurement serve as a value generator for the organization, but the pace of change today makes this exceedingly difficult. It’s especially hard to develop sourcing & procurement staff capabilities at pace and evolve organizational structure.

But sourcing & procurement leaders are driven to improve: 96% say that staff will have to significantly improve their effectiveness at using digital technology to succeed in their role, and 81% indicate that adapting organizational structures to business digitalization is an urgent issue in their 2021 strategic plan.

Gartner helps sourcing & procurement clients sustain progress on their journey as a trusted advisor to the business. We provide the tools and guidance that sourcing & procurement leaders need to build their teams’ digital-capable skill set, and we enable sourcing & procurement teams to deliver business value in everyday work.