Service-dominant strategic sourcing: Value creation versus cost saving

Abstract

The concept of strategic sourcing recognizes that procurement is not just a cost function, but supports the firm’s effort to achieve its long-term objectives. Organizations more and more expect from their chief procurement officer (CPO) to develop long-term and short-term plans in procurement. Typically, however, procurement is driven by a tactical spend management sourcing process aimed at cost saving targets, which is not able to support organizations in achieving strategic objectives like innovation, value creation, sustainable competitive advantage and long-term partnerships. A paradigm shift from a tactical way of thinking about sourcing to a more strategic way of thinking is needed by focusing on value-driven targets. To help realize the new paradigm of value-driven management in sourcing, we designed a systemic view on strategic sourcing based on Service-Dominant Logic and (service) systems thinking. We used this systemic view to develop the conceptual basis of a new modeling and analysis language that helps organizations in exploring sourcing alternatives according to value-driven management.