3.8 Conclusion

Consider the opening epigraph: "The cost of a thing is the amount of life I am willing to give up to pay for it." How you organize your resources will influence how much of your life you must spend to get the job done. You have two options: You can work harder or you can work smarter! In this chapter, we have talked about how to work smarter.

By structuring sourcing to understand and meet the needs of your internal customers, you can create a culture of commitment to excellence. A customer-focused sourcing organization helps you 1) understand customer needs, 2) generate support for vital sourcing initiatives, and 3) gain insight into supplier plans to make the sale. The alternative to earning customer commitment is to set up rules to assure compliance to sourcing policy. We might characterize a compliance culture as follows: If we have to enforce compliance, we are not doing our job well! Enforcing compliance burns time and energy—and it costs you goodwill and reputation. Relying on compliance to get the job done is costly.

By structuring sourcing decision-making to leverage resources, you can lower costs, improve quality, and achieve needed flexibility. Remember, the correct answer to the question, "Which structure is best?" is, "It depends!" "On what?" you ask. On the analysis needed to understand your company's strategy, the pros and cons of centralized and decentralized structures, and the tradeoffs between scale and responsiveness. Simply stated, to structure sourcing for success, you need to do your homework. We might characterize this homework as the up-front investment required to earn a positive long-term return. As the classic Fram commercial for oil filter touts, "You can pay me now, or pay me later."