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Sourcing: Collaborative Success

By: C. Richard Panico
Posted: December 5, 2006, from the December 2006 issue of GCI Magazine.

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Many pitfalls are often encountered when planning sourcing projects. However, these pitfalls can be managed or mitigated through application of foresight and cross-functional problem solving.

Seamless implementation of a complex sourcing project requires application of proven project management techniques. Without strong leadership, cross-functional participation often leads to inefficiency and missed objectives.

  • Ensure focus. A project manager must make sure that resources are used efficiently and proactive project focus is balanced against a “fire-fighting” environment.
  • Communicate. Projects dealing with significant change require even greater focus on communication than routine projects. Effective communication is proactively and carefully planned.
  • Manage change. A good project manager identifies change early, quantifies its justification and impacts, ensures approval and clear communication, and mitigates the effect on the original objectives.
  • Accelerate team cohesion. The project manager must establish a culture of teamwork at the project level and with the external manufacturer during implementation, as this relationship must survive technology transfer and will be a critical component of sustainable success.

Measuring Success

Often, a decision that looks good on paper is not validated once implemented; that can be a costly oversight. Without predefined methods of measuring success, all ability to course-correct, continuously improve or implement contingencies is lost. The most common metrics used to justify a sourcing change are associated with the cost of goods sold. These metrics are critical and must be measured, but broader metrics should also be developed to represent the cross-functional reality of a sourcing initiative.

Product sourcing is a reality in today’s economy. Viewing the sourcing process as a critical business strategy that extends beyond a procurement exercise will help to ensure its ultimate success. All aspects of a business are impacted in the sourcing process. Using proven project management methods to effectively tap into the experiences, talents and knowledge of a cross-functional team improves the quality of decisions made, accelerates implementation and demonstrates benefit through measurement.

Acknowledgement
C. Richard Panico gratefully acknowledges the co-authoring of this article by his colleagues Larry Radowski, PMP, ASQ SSBB, manager of project planning and execution; and Michael McLeod, PE, PMP, vice president of operations at IPM.