Implementing strategic sourcing in South Africa

Strategic sourcing is currently one of the most powerful levers for profit improvementand is hence receiving increased attention from corporations. This research focuseson the key techniques used in strategic sourcing departments and issues faced inmaking a strategic sourcing procurement decision in South Africa.Large South African industrial and resource companies that are acknowledgedleaders in strategic sourcing in South Africa were interviewed. The data gatheringconsisted of structured interviews with the overall leader, or their deputies, ofstrategic sourcing in each company.The research objective was broken down into a number of different propositions,supporting the techniques used in sourcing departments and issues faced whenmaking a strategic sourcing procurement decision.The results showed relatively strong support for the identified techniques (from areview of literature) that strategic sourcing departments use, including crossfunctionalsourcing teams, sourcing information systems, alignment with corporatestrategy and the use of a formal sourcing process. There was little support for valuechain mapping and formal supplier relationship management.There was poor support for the issues identified in the literature as affecting astrategic sourcing procurement decision. Core competencies, the externalenvironment, product and process and technology and demand variability did notplay a significant role in a strategic sourcing procurement decision. The onlystrongly supported area was around cost management.The South African companies who have been conducting strategic sourcing effortsfor the longest are likely to be using the most techniques and most other companiesplan to use more. However, the procurement department’s involvement in strategicoutsourcing decisions remains minimal