Companies must be able to compete to stay ahead of competitors and survive. Keeping control of costs is therefore imperative. Purchasing became a senior management role in the 1960´s and first recognized as a strategically important function during the 1980´s – when the number of suppliers rapidly expanded.
By the late 1990’s the use of computers and the introduction of the Internet saw the beginning of purchasing’s transition into strategic sourcing. Today, purchasing professionals are instrumental to the success of organizations.
The professionalization of sourcing has become a big challenge for sales organizations, as it requires more than just old fashioned “wining and dining” to secure a deal. Instead, a sales organization needs be professional in its way to engage customers. Successfully embedding a professional approach in sales provides a strong competitive advantage to stay ahead of competitors.
So how should sales organizations approach professional sourcing functions?
- At first it is important to understand how your customers categorize and source products or services (A)
- …then use the categorization to leverage the offering and develop a competitive advantage (B).
A. How do companies use categorization when sourcing products or services?
Customers separate suppliers by strategic importance and risks related to supply
Professional and well-evolved sourcing functions separate their approach to procuring products and services in different categories. The categorization of suppliers to products or services depends upon:
- Strategic importance – how does the service enable or support the company’s strategy?
- Lack of availability or risks in supply – what is the availability and what risks may be involved in the supply of the product or service?