Considered one of the most modern tools available to organizations' purchasing departments, few companies in Brazil still use Strategic Sourcing. The methodology, used to reduce costs in a sustainable way, establishes a new business relationship between purchasing companies and suppliers that generates benefits for both parties.
“The vast majority only use part of the process,” emphasizes Cilene Bim, a consultant specializing in strategic purchasing and supply chain who has just released 'Strategic Sourcing – Manual de Aplicação da Metodologia de Compras Estratégicas', the first title specifically dealing with the subject ever published in the country. According to Cilene's calculations, the tool is capable of reducing a company's purchasing operation costs by up to 30%.
The book is a compilation of the international methodology called Strategic Sourcing. Its objective, according to it, is to reduce the total acquisition cost (TCO) of inputs, through a structured system, process changes, best practices, and stimulating competition between suppliers.
In the following interview, consultant Cilene Bim explains how companies should proceed to implement the new strategic cost reduction process.
CostDrivers – Compared to other countries, at what stage is Strategic Source in Brazil?
Cilene Bin – I would say that today, in Brazil, only 20% of the organizations listed in the ranking of the Best and Largest Companies published by Exame magazine, for example, apply the methodology in its entirety. Many use only part of the process, but not the strategic part, the one that makes the difference, that can generate new opportunities; there are very few, effectively. To give you an idea, the book I am launching now is the first title that deals specifically with the subject ever published in the country.
CostDrivers – How does the tool fit into this period of crisis that companies are currently experiencing in the country?
Cilene Bin – In our organizations’ current situation, Strategic Sourcing is a powerful tool for reducing costs in a sustainable manner, generating benefits for purchasing companies and suppliers. It is a tool that establishes changes. Today, we work on training procurement professionals through Inlacce – the Latin American Institute of Corporate and Strategic Purchasing and EAD Director, as well as on the development and execution of cost reduction projects through Nova Solução Consultoria.
CostDrivers – You say that this is a tool that establishes process changes. From your point of view, are companies operating in Brazil and their purchasing personnel prepared to absorb these changes?
Cilene Bin – To implement a strategic process, organizations need to incorporate a movement of change within their organizations to accommodate a team focused on this strategy. There must be a process of change and restructuring in the Procurement area. Currently, the personnel involved in the strategic cell corresponds to only 10% of the team that works in this area, the majority focused on the procurement process, on the operation itself. The application of this new methodology requires changes, a restructuring of the Procurement area, and the involvement of all members of the Purchasing team in the same direction is mandatory. In this sense, the effort must come from the company as a whole. Of course, this represents an additional cost because it has to invest in training these personnel, but when the strategic cell starts to generate results, the operation becomes easier. There has to be a willingness to invest in this operation.
CostDrivers – In practice, what impact does this have on relationships with the supplier network?
Cilene Bin – Initially, one of the tool’s objectives is to consolidate new purchasing volumes, a consolidation that can occur both with a reduction in items and a reduction in the supplier base. But suppliers will only benefit because this will mean a larger volume of orders, a long-term supply relationship, and guaranteed supplies. When I qualify the volume, this will certainly result in cost reduction. In other words: by using the tool, the company not only qualifies its supplier network but also increases its order volume, guaranteeing long-term contracts, guaranteed supplies, and increased sales for this supplier. The application of the tool establishes a healthier relationship for both the customer and the supplier. Nowadays, these relationships are informal even in categories that have a significant impact on companies.
CostDrivers – What do suppliers gain from this?
Cilene Bin – They also benefit from reduced costs because that effort and dispersion of supply no longer exists. The supplier’s fixed sales costs are reduced and they can even develop new processes and new products. It’s a good relationship for both sides, otherwise it’s not sustainable.
