Sourcing & Procurement Leadership

Transform sourcing & procurement operations for greater value creation and innovation

Key activities for managing sourcing & procurement

Sourcing & procurement leaders are searching for ways to improve their departments and drive greater business impact. But competing priorities leave them wondering where to focus time and money. What sourcing & procurement activities matter most?

Don’t waste time on sourcing & procurement activities that won’t move the needle: Our sourcing & procurement activity map identifies the 29 essential activities for managing sourcing & procurement. 

Download the activity map to learn what leaders say are the key sourcing & procurement activities to building a world-class organization. 

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29 essential sourcing & procurement activities

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    We needed to setup a supplier relationship management program but didn't know where to start, so we reached out to Gartner to help us establish a framework and structure. What we got from our partnership with Gartner was a lot of time with an analyst to help us think through all the steps we needed to take to have a supplier relationship management program in place. Taking these steps got our program started and off the ground.

    VP, Global Procurement

    Food Manufacturing/Agriculture Industry

    Sourcing & procurement becoming more critical

    Sourcing & procurement is becoming more critical as supply chains grow increasingly complex. Specifically, how we use suppliers is changing: +70% of sourcing & procurement professionals report using suppliers to tap into new-in-kind technology services and/or something outside of their organization’s core business model. 

    Organizations are more reliant on suppliers than ever before. In such a world, it is the role of sourcing & procurement to unlock new value from the supply base and protect the organization from future disruption.

    Role of Third Parties in Our Businesses: 72% of procurement professionals agree with the statement "New-In-Kind Technology Services", 71% agree with "Outside of the Company's Core Busienss Model" and 70% agree with "increasing Number of Startups"
    Changes Observed in the Third-Party Network in Last Three Years: 65% of procurement professionals agree with "Greater Variability in Third-Party Network", 65% agree with "Increased Use of Fourth and Fifth Parties" and 64% agree with "Greater Access to Data Assets"

    Tackle top priorities through sourcing & procurement transformation

    There is a lack of discipline and consistency in sourcing & procurement, specifically on cost management and business value creation through category strategies, supplier performance management and collaboration with strategic supply partners. Sourcing & procurement leaders also struggle with mitigating supply base risk (e.g., operational disruption, financial loss) and navigating new technology (e.g., automation, advanced analytics).

    Sourcing & procurement leadership must invest in supplier risk management, digitalization, future of work and postpandemic recovery. Key criteria for sourcing & procurement success are cost optimization, supplier resilience and responsible sourcing.

    Supply chain sourcing and procurement insights you can use

    Supply chain sourcing and procurement leaders must move beyond short-term cost management to leverage supplier capabilities to their maximum advantage in a structured and segmented fashion. This involves aligning supply chain sourcing strategies, driving stakeholder engagement, and setting and communicating the right metrics internally and externally to drive the right behavior.

    3 Sourcing and Procurement Principles to Support Inventory Excellence

    This research identifies three principles that sourcing and procurement leaders can apply to support inventory excellence while fulfilling functional objectives for cost-optimized supply.

    Implement an Effective Supplier Relationship Management Program

    When supplier relationship management programs fail, it is often due to poor program design and lack of engagement from key internal and external stakeholders. Sourcing and procurement leaders should follow Gartner’s 4-step framework to implement a supplier relationship management program that identifies, engages and develops strategic suppliers.

    Gartner’s Supply Chain Cost Optimization Playbook for Sourcing and Procurement Leaders

    Cost optimization is a fundamental responsibility for sourcing and procurement leaders in supply chain. This research provides a framework and top ideas to optimize costs through both short-term tactical improvements and longer-term transformational changes.

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    Gartner Supply Chain Symposium/Xpo™

    Join the world's most important gathering of CSCOs, supply chain executives along with Gartner experts to transform and innovate your supply chain strategy.

    Saved $600,000 in annual costs by leveraging supplier category intelligence
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    Leveraging Supplier Category Intelligence to Reduce Costs

    With an impending contract renewal with their largest supplier, a medical device manufacturer was lacking a well-defined strategy to renegotiate terms intended to streamline costs. Gartner helped guide their negotiation strategy and recommended ways the client could leverage vendor category intelligence saving the client up to $600,000 in annual costs.

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    See the 17th annual ranking of the world’s superior supply chains to learn the standard for supply chain excellence.

    Sourcing & Procurement: FAQs

    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 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.

    Support for Sourcing & Procurement Leaders

    Gartner provides trusted insights and objective advice to help sourcing & procurement leaders manage performance, risk, value creation and innovation of the sourcing & procurement team as well as suppliers