Below, are the five levels of procurement competence as defined in an article published in CSCMP Quarterly:
(i) Traditional: Purchasing's primary role is to fulfill the needs of internal clients. Some approved vendors may be in place, and purchasing tries to ensure that business units buy from those suppliers. Other functional areas may make sourcing decisions and inform the purchasing department after the fact. The purchasing professional's day-to-day role is almost exclusively transactional.
(ii) Basic: The sourcing organization's strategy is typically driven by a corporate mandate to reduce the price paid to suppliers. There are defined and documented procedures, but they may not be consistently followed. While there is some effort to address strategic issues, the primary focus is on driving down prices. Purchasing personnel are included in the sourcing process but they do not drive the process.
(iii) Intermediate: These strategic sourcing/supply chain organizations follow a strategy that focuses on price as a major component of cost and is aligned with corporate business goals wherever possible. The organization's processes are based on strategic sourcing principles, and the group uses many sourcing techniques with success. Business units are included in the process but do not always respond when asked to participate in strategic sourcing initiatives. The majority of the organization's spend is visible, and analysis focuses on reducing the total cost of ownership.
(iv) Advanced: Strategic sourcing is firmly embedded in the organization's supply chain. Supply chain and strategic sourcing strategies are integral to the company's overall strategy for future growth. The business units welcome participation on cross-functional supply chain and strategic sourcing teams, support the sourcing process, and actively partner with the supply chain/strategic sourcing organization. The organization's spend is visible, and analysis is supported by automated systems that track total cost of ownership.
(v) Value-creating: In these world-class sourcing organizations, the head of supply chain and strategic sourcing is at the C-level in the company. Supply chain and strategic sourcing processes are recognized as value creators throughout the company. The supply chain/ strategic sourcing organization helps business units and corporate leaders develop integrated business strategies. It is often asked to be the enterprise's leading change agent and innovator.
Source: Yarusso, L. 2009. 3 Steps to Strategic Sourcing. CSCMP Supply Chain Quarterly, Quarter 3/2009.