ABSTRACT
This chapter introduces the use of practices and models as guidelines in strategic sourcing. The Seven Business Models provide a method for characterizing the type of supplier that can successfully provide an item, supply, or service. The business models provide the tools necessary to assess a procurement category’s characteristics and determine or assign categories to an entity’s portfolio before using the fourth cornerstone practice framework. This framework establishes procurement categories and then projects within them in a four-step continuum. The first cornerstone focuses on a high-level assessment of a category through the stakeholder’s lens. The second introduces analysis—including the use of the Kraljic Matrix—to assess the risk and value components of the matrix and total cost of ownership concepts. The third cornerstone forms the holistic plan for the category, including competitive sourcing methods. Finally, the fourth cornerstone discusses contact management, performance management, and exit management, incorporating lessons learned into the category as a continuous refresher.
The models and approaches presented in this chapter vary with the complexity or sophistication of a given category. The ability to map a project into a business model category and approach the category’s sourcing strategy through an appropriate framework should be part of any strategic sourcing plan. Public procurement professionals must recognize the importance of strategically gathering suppliers to achieve open competition and optimal results for their entities.
