From Goran Cangl (photo by Philip Taylor)
I bet, every procurement leader worked on a co-sourcing idea at least once in hers/his career. So why don’t we see procurement alliances all over the place? And why are only few of the existing ones successful?
There are many obvious and less obvious reasons for this, which I could analyze in another paper. Instead, let me just capture the fact, that entering into intercompany procurement alliances is not typical for current procurement organizations. It is not common in our business reality.
But this reality is being challenged now! The traditional suppliers are becoming partners, competitors and customers, as the companies hungry for growth, look for ways to enter into new markets. In our private life, we increasingly share our cars, our living and working space. Companies collaborate on joint going to market activities, they co-innovate and co-create, even share their IPRs.
So, what is procurement function still waiting for?
Perhaps we lack the right intercompany contacts or space to share abstracts of our contracts? Perhaps we just don’t know where to start, where to discuss our ideas or share our sourcing challenges without involving an external consulting company?
Well, in case you are ready for your next (and perhaps last) round, trying to solve the co-sourcing challenge, let me welcome you to Open Ecosystem Network (www.open-ecosystem.org)!
Open Ecosystem Network is a FREE multi-industry platform, co-founded by Nokia and is designed to enable co-development, ideation, but also sourcing disruption. With the sourcing module on the platform, we eventually want to prove three theories, disrupting traditional procurement approach:
1. Disrupt the business models of what we source
The first idea is based on the fact, that we in procurement, typically don’t re-invent the business models of the commodities we purchase, but rather optimize the existing one. Looking for instance at the indirect categories like logistics, travel & fleet, we continue to optimize our contracts with existing suppliers in know business models, in the time where Uber, Airbnb and the like are radically changing this industries overall. The use case we have in our mind here is to share the abstracts of our legacy contracts today, requesting the OPEN ecosystem to disrupt them looking especially at scope, underlying business models, delivery models etc.
2. Disrupt the sourcing process
The second idea is about disrupting our own way of working. In the past, when you booked a trip, you made an appointment with a travel agent, who worked in the local travel agency. The agent would show you catalogues of your travel destinations and recommend some top 3 hotels in the area, saying: we have special discount with them and I visited them personally to convince myself of their quality. Remember those days? Does this remind you to some today’s procurement roles? Well, the issue is, you don’t go to travel agencies anymore, but you book your travel via online portals. The prices are shown in a real time and are transparent. And you have ratings from other tourists to help you make your decision. Our use case here is to use technology, connecting demand with the supply on the platform directly. Not removing the procurement function, but even strengthening it in every stage of engagement.
3. Enable co-sourcing
Finally, the third idea on our sourcing module, addresses the co-sourcing itself. Interestingly, the expectation here is that we don’t need to do anything pro-actively, but that co-sourcing will just evolve from all other engagements on the platform. Everybody on the platform is already openminded toward transparency and actively seeks for ideas how to improve its own procurement business. Sharing abstracts of its own legacy contracts enables 3rd parties to see beyond company borders and proactively propose joining forces, bundling spend, changing the business models etc. Perhaps the strongest argument is connected to future co-founders and partners of the OPEN platform. They will formalize their business relationship by entering into alliance agreement, sharing their data and ecosystems on the platform. Co-sourcing is here only one of many logical collaboration areas.
Now, if you prefer to join the OPEN procurement movement, instead of just reading too looong texts about it, take the ‘red pill’ by clicking here.