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This report focuses on the initial findings of organizations that 
have deployed Strategic Sourcing programs between one to five 
years compared to those in the second set of respondents, six 
years and greater, highlighting their avenue to success. 
 
 
 
 
STRATEGIC SOURCING: 
LESSONS LEARNED 
December, 2014 
 
 
 
 
 Louis Berard, Senior Research Analyst 
Global Supply Chain, Complex Spend, HCM 
 
 
 
Report Highlights 
 
Top business 
pressures driving 
cost reductions and 
savings 
 
Sourcing 
sustainability can 
address non-price 
factors as part of a 
strategic sourcing 
process 
 
 
The ability to find 
new ways to stay 
competitive in 
Strategic Sourcing is 
ever changing 
 
Essential capabilities 
of Strategic Sourcing 
 
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Strategic Sourcing: Lessons Learned 
 
 2 
 
Executive Summary 
In a correlating paper “How to Build a Strategic Sourcing 
Organization,” we discussed how to position your organization 
in order to be successful in creating a strategic sourcing 
program, along with the key benefits afforded such participants, 
as seen below. Shown here in Figure 1, these increased levels of 
cost savings of 73%, more robust spend categories of 56%, and 
better alignment of sourcing and business objectives at 50% are 
really just the tip of the iceberg. 
Figure 1: Top Five Benefits 
 
 
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Strategic Sourcing: Lessons Learned 
 
 3 
This report will review the performance of organizations that 
have deployed strategic sourcing programs between one and 
five years, compared to organizations that have strategic 
sourcing programs deployed for six years and greater. 
We will journey through the pressures organization have faced, 
what our respondents’ organizations were capable of, and the 
actions taken to mitigate the pressures, with their capabilities 
and some of the key technology enablers introduced to create a 
winning solution. 
Feeling Under Pressure 
Sourcing organizations continue to be pressured to find new 
approaches to reduce cost and identify savings. External 
pressures from global markets, government regulations, and 
global risk factors affect key decisions made by sourcing teams 
around the world. The ability to maintain returns is a 
requirement for these organizations today. Skill sets are ever 
changing in this global economy; the ability to maintain the 
highest skills in the market place with an ever- growing 
contingent work force creates challenges for sourcing 
professionals, along with the need to understand category 
management strategies and the complexity of the payment 
processes. 
Given these pressures, Figure 2 represents organizations’ 
mandates to reduce cost and increase savings as a leading 
pressure by 72%. As many organizations continue to find the 
balance between contingent labor and permanent labor, 
knowledge leakage is a growing concern. The ability to 
understand category management strategies that will improve 
the overall business model requires seasoned professionals well 
versed in the corporate vision, another key pressure at 61%. 
Key Performance Metrics 
Total spend under 
management organization: 
1-5 years 58% / 6+ years 69% 
 
Average yearly savings 
realized by your sourcing 
team. 1-5 years 7% / 6+ years 
9% 
 
Average cycle time to create, 
negotiate, and approve 
contracts (in DAYS): 1-5 years 
44 Days / 6+ years 42 Days 
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Strategic Sourcing: Lessons Learned 
 
 4 
The ability to mitigate risk while being compliant to contracts 
and understanding the source-to-payment processes, with ever 
increasing stakeholder pressures for sustainable sourcing, are 
key areas that consume 96% of corporate pressures seen today. 
Strategic sourcing professionals have a lot on their plate to work 
with, and not a lot of time. 
Figure 2: Top Pressures 
 
Opportunities for Improved Sustainability 
Sustainability programs define the need and ability to use 
advanced sourcing techniques, as well as an all-encompassing 
vision which can address non-price factors as part of a strategic 
sourcing process. 
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Strategic Sourcing: Lessons Learned 
 
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While an active part of sourcing is sustainability supported by 
corporate responsibility, it’s clear that today’s global sourcing 
architecture and methods would make one raise a conscientious 
eyebrow. 
Figure 3 shows that only 7% of organizations have incorporated 
sustainability into their spend strategy, while more than a 
quarter of respondents indicated it is not currently a part of the 
decision making process for spend. The positive side, however, is 
that this figure has been reducing year over year due to 
regulatory pressure. 
Figure 3: Sourcing Sustainability 
 
Opportunities for Improvement 
The ability to mitigate these pressures requires an ability to 
improve vendor/customer insight to improve sourcing 
performance. Based on this survey, however, it is evident that 
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Strategic Sourcing: Lessons Learned 
 
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barriers to strategic sourcing revolve around the lack of 
advanced techniques for the one to five year organizations. 
In viewing Figure 4, the inability to integrate sourcing initiatives 
into proper data extraction/collection (where younger 
organizations lag at a rate of 57%), or the ability to use data to 
support negotiations at 44%, shows a clear lack of proper 
sourcing strategies, which would provide any business greater 
cost savings and visibility into their sourcing process if they were 
properly utilized. 
Figure 4: Lagging Attributes to Support Strategic Sourcing 
 
When the cornerstone of any sourcing process is the ability to 
proactively forecast and budget, as seen in the poor showing by 
younger organizations with a 33% separation (22% vs.55%) 
between one to five year organizations compared to 
organizations that are six years and greater, someone needs to 
say “stop the presses” and take a look at the sourcing process for 
these younger organizations. 
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Strategic Sourcing: Lessons Learned 
 
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One key item that needs to be discussed here for the one to five 
year organizations is that they have a lot on their plate and 
currently do not have the experience of the six plus year 
organizations. 
The ability to mitigate these lagging attributes quickly for these 
young strategic sourcing organizations will ultimately speed up 
their journey. By gaining greater insight into your vendors and 
the various impacts to both you and the customer, critical 
improvements and techniques can be captured on how 
organizations source their materials and services, yielding 
greater opportunities for all. 
StrategicActions – Driving Strategic Sourcing 
As organizations continue to face new challenges and 
opportunities in this ever growing global economy, the ability to 
find new ways to stay competitive is ever changing. The 
competence to leverage strategic sourcing is a must. 
But in order for technology enablers to be effective, 
organizations must first look at themselves as a whole. This 
process starts with proper organizational alignment to the 
sourcing strategy. 
Figure 5 shows the top three strategic actions for our one to five 
year and six plus year organizations. It’s clear that both groups 
recognize the importance of proper alignment of sourcing 
activities for the greater good of the organization. 
 
 
 
 
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Figure 5: Strategic Actions 
 
In viewing both groups, the need to establish formal strategic 
sourcing processes is also apparent, as these efforts appear to 
be applied properly in this area by each type of group. We can 
see less of a need for this element in our six plus organizations, 
as they have been down this path before, so to speak, and have 
formalized/standardized their processes to a point of efficiency. 
Unfortunately for our one to five year organizations, they are still 
working on getting the right standardization before formalizing 
these processes; this takes time to be successful, as reflected in 
the figure above. The 7% separation should be viewed as time 
required building the proper strategic sourcing solution. 
 Both groups also understand the need to adopt technology to 
improve their overall holistic view of the organization, as these 
improvements will provide them with greater visibility and 
insight to make well informed decisions both internally and in 
external negotiations. 
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Strategic Sourcing: Lessons Learned 
 
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Essential Capabilities for Strategic Sourcing 
The ability to optimize your bid analysis as part of strategic 
sourcing processes is essential. Based on what we see in Figure 
6, organizations have the technology today to capture top cost 
drivers in their bid processes, even if senior organizations are 
more adept (57% vs. 17%) at automation within an e-sourcing 
platform. 
The ability to collect bids based on price and non-price terms 
(84% vs. 61%), along with collecting data from multiple sources 
(71% vs. 44%), now provides suppliers with wider opportunity 
and the freedom to express their bidding and preferences in a 
more sophisticated response for quotes. Our senior 
organizations are able to establish a more enhanced ability to 
analyze varying bids from suppliers, based on their years of 
experience and historical databank. 
The ability to standardize both direct (67% vs.44%) and indirect 
(67% vs. 28%) spend allows organizations to now capitalize on 
capturing these savings more efficiently than ever before. A good 
example of this is something as simple as naming a pipe wrench 
- or is it a Stillson wrench, or Stillson? Maybe it’s called an 
adjustable wrench, or even just a plumber’s wrench. 
The fact is we are all talking about the same tool, but it appears 
differently in large non-standardized systems, as various names, 
costs, and suppliers. Imagine this spread across a global 
organization with millions of varying parts. Once properly 
mapped and standardized, this standardization now becomes a 
major cost reduction while providing significant savings by 
properly sourcing this commodity. 
 
 
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Strategic Sourcing: Lessons Learned 
 
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Figure 6: Capabilities 
 
Key Takeaway 
Gaining greater insight into your suppliers is essential; 
developing customer vendor relationships requires you both to 
view each other from a 360-degree view. Strategic sourcing is a 
critical component to organizations, identifying different 
approaches for finding savings and sustainable sourcing in the 
global market of today. 
 
 
 
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Strategic Sourcing: Lessons Learned 
 
 11 
 
 
 
Related Research 
Treasury and Risk Management : Top 
Financial Risks and Tools to Manage 
Them; December 2013 
Risk Management Through Effective 
Financial Planning, Budgeting, and 
Forecasting; May 2013 
Risk Management for Travel: Policy and 
Mobility is a Must; April 2014 
Improving Revenue Operations: Efficiencies and 
Innovation Lead the Way; May 2014 
Author: Louis Berard, Senior Research Analyst, GSM, Complex Spend and VMS 
(louis.berard@aberdeen.com) 
About Aberdeen Group 
For 26 years, Aberdeen Group has published research that helps businesses worldwide improve performance. We 
identify Best-in-Class organizations by conducting primary research with industry practitioners. Our team of 
analysts derives fact-based, vendor-agnostic insights from a proprietary analytical framework independent of 
outside influence. The resulting research content is used by hundreds of thousands of business professionals to 
drive smarter decision making and improve business strategy. 
Aberdeen's content marketing solutions help B2B organizations take control of the Hidden Sales Cycle through 
content licensing, speaking engagements, custom research, and content creation services. Located in Boston, MA, 
Aberdeen Group is a Harte Hanks Company. 
 
 
 
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	Executive Summary
	Feeling Under Pressure
	Opportunities for Improved Sustainability
	Opportunities for Improvement
	Strategic Actions – Driving Strategic Sourcing
	Essential Capabilities for Strategic Sourcing
	Key Takeaway