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5 | Supply Chain Management <strong>Viewpoint</strong> Spend mapping and scope definition The spend mapping and scope definition phase starts with an analysis of MRO service spend at a company level, classifying it first into appropriate categories and then again at a site level. The output, in effect, is a detailed—and classified—MRO service spend database by site. Using this information, an organization can form a view of fruitful site-by-site categories and locations to tackle. Again, the focus is on pragmatism: For example, if the overall spend at some locations is too small, then a company may opt to defer those locations in favor of better opportunities. Similarly, if the expenditure on some categories is simply too small to offer any prospect of worthwhile gains, then managers might choose to disregard those categories in favor of better prospects 5 elsewhere. Having said that, it is important to note that categories and sites sidelined in this way are not permanently excluded from consideration. They can be tackled subsequently, when gains elsewhere have been secured. The last step of this phase consists of a combined meeting for the sites selected within each target cluster. Its purpose is to validate the spend data, gather support and momentum for the project, and carry out the initial cross functional team selection. If there are any doubts about the appropriateness of the exercise—at either a category or site level—then those issues should be raised at this time. However, the painted picture is often too alluring to resist.
Site-by-site diagnostic With the initial phase complete, detailed work starts at a site level. Essentially, it involves first defining the "as is" situation to establish a baseline, and then enriching this basic picture by gathering additional spend information. Applicable contracts and specifications need to be collated, for example, and their provisions understood. Interviews and workshops are also held, and organizations can use this time to explore the procurement processes that underpin each category with key stakeholders. Meanwhile, at a cluster level, work is under way defining the "to be" situation on both a cluster and category basis. Here, the emphasis is on analyzing the drivers of the procurement value creation model, pursuing the twin objectives of confirming categories suitable for sourcing on a cluster basis, while How Indian companies are improving their performance through procurement Sourcing site mastery by site | 6 developing recommendations for process improvements, capability development and organization sizing. In other words, now is the time to ask, "What exactly are we going to buy— and how exactly are we going to do it?" A workshop, followed by a site-by-site optimization plan, concludes the phase. Collectively, stakeholders use the workshop to prioritize the opportunities available based on the estimated potential savings and their relative ease of achievement, resulting in the preparation of a detailed business case for each opportunity. In essence, each case summarizes the costs and benefits associated with each opportunity, together with the predicted timescale. Based on our experience with a diverse range of leading companies, we have found that strategic sourcing can help organizations guard themselves against that possibility and ensure an effective implementation.
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