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- What is your current situation in your commodity in terms of spend per supplier, market changes, technology and cost drivers?
- How do you drive your sourcing organization towards predefined targets?
- What activities must be done to reach those targets?

Commodity strategies
One of the backbones in an organization is the strategy. The strategy should explain the current situation, the wanted position in a predefined time span and what activities are needed to reach that position. When creating a commodity strategy it is important to do it cross functional: perform a stakeholder analysis before creating cross functional commodity teams and then create a joint commodity strategy which all stakeholders buy into.

A basic strategy could be divided into different areas such as:

· Objectives – definition of the objectives to be reached in a decided time span. The objectives should be SMART: Specific, Measurable, Realistic and Timed.

· Market input – what is happening in the market, new suppliers, suppliers that are exiting the market, cost drivers, capacity situation and trends

· Technology trends – what are the new technologies in the market, what is our technology roadmap and how does that fit with our supplier base?

· Spend analysis – where do we spend our money and how do we want our spend to be distributed. How could we use this spend strategy in our commodity strategy to reach our objectives?

· Supplier analysis: what suppliers do we use and how do they coop with our demands? What activities do we need to perform with our existing and new suppliers?

· Kraljic analysis – how do we position different components and or suppliers in Kraljic’s matrix and what strategic initiatives does that implicate?

· Strategic sourcing road map: a road map defining wanted position, key areas and activities to execute in order to reach the objectives

· Executive summary to summarize the strategy and key activities

Common pitfalls

- Forget to define clear objectives that are SMART meaning it is impossible to follow up if the strategy has been successful or not

- Not having enough information about the market meaning risk of defining wrong actions and betting on the wrong suppliers

- Spend data is not accurate which means that you don’t know where and how much money you spend, this can lead to having the wrong size of the supplier base (too many or too few) for the actual spend

- The strategy is not developed nor aligned with important stakeholders meaning it becomes an isolated sourcing strategy and not a cooperate commodity strategy. In order to implement an effective commodity strategy it needs to be aligned frequently with key stakeholders.