Of the nine major barriers to success in sourcing, three of them are tied to leadership. For sourcing to be successful, it requires a senior executive champion and support at the CEO level. A seasoned executive should manage sourcing daily with deep sourcing experience and strong communication skills. Following are the possible causes for these kinds of issues:

1 .Invisibility

Leadership invisibility is the result of limited visibility of a senior sourcing leader – whether there is no C-level representation, or there is no strong, vocal leadership at the C-level. Most importantly, it affects the sourcing team’s credibility across the entire organization. Leadership visibility can affect different areas.

C-level Visibility

A visible sourcing leader drives credibility across the entire company. A strong leader builds organizational structure, ensures sourcing team integration with other business units and actively manages a budget.

Sourcing Team Visibility

A strong sourcing team takes ownership of global sourcing processes, sets priorities and aligns priorities with the company through goals and objectives.

Project Team Visibility

A strong project team takes ownership of the project, drives participation across the stakeholder community, manages progress and fights for results.

2. Contradictory Organizational Goals

The organization needs a clear, concise sourcing strategy that is consistent with the overall organization. A finance mandate of lower cost and an engineering mandate of higher quality cannot have equal weighting, since generally higher quality products cost more. Goals need to be:

  • Balanced – Not too many, nor too few
  • Aligned – Matching with the C-level management.
  • Measurable – Eg, Save $20 million dollars, run 100 e-sourcing projects
  • Long-term – No ‘goal of-the-month’ philosophy

3. Ineffective Incentives

Motivated people are successful people – and financial incentives can be very effective, but only if they make sense. If a significant part of the sourcing team’s compensation package is a bonus based on PPU or TCA reduction, chances are they will be attracted to the absolute lowest cost award, which might be inconsistent with overall corporate goals. To ensure goals are aligned, incentives should be tied to the individual, the team’s success and the company’s success.

Aval Sethi