One of the major challenges for young and growing companies is transitioning away from an R&D-led procurement model to a centralized strategic sourcing organization without stifling development and innovation. Just ask Tim Rachke, director of global sourcing at Cabot Microelectronics in Aurora, Ill. Until recently, the five-year-old maker of polishing compounds for the high-tech industry was still approaching its sourcing very much like an R&D organization and less like an established $300 million business with real costs to consider and new markets to expand into.

"The reality we were dealing with is development people like to work with suppliers that are good for their purposes, but may not be the best suppliers for the business as a whole," recalls Rachke. "We were still getting many of our products from suppliers that our development team had found and developed relationships with, and our group was functioning in a tactical role."

Not anymore.

Cabot is progressing towards a centralized procurement organization which leverages commodity experts in its major spend areas like chemicals, packaging and silica or alumina-based particles. Those commodity experts work closely (and early on) with R&D and production to drive more spend to strategic or preferred suppliers.

"At Cabot, we now use new product teams where the development people can tell members of our organization their requirements and our sourcing people can find a supplier based on those requirements and their own expertise," he says.

Sound like Purchasing 101? It is, but at a company Cabot's size it's often a concept the managers don't know or simply ignore. How do you change the attitude toward suppliers? Internal communication and collaboration. "In our case, if R&D understands the core group of suppliers we're trying to drive more business to, it increases communication and streamlines the process," he says.

At the same time, Cabot has local procurement staff at its plants in Wales, Japan and Singapore working to find local suppliers in those regions.

Cabot is also now using supplier consolidation efforts to drive more spend with the most qualified partners. Rachke says by having a detailed list of strategic partners and preferred suppliers, other parts of the company, notably R&D, can better understand the decisions being made and how they can help contribute to the goals.

When it comes to working for a midmarket company, Rachke says there are challenges and advantages. Obviously, the lower material volumes often mean less leverage with suppliers. He says the idea of marketplaces where midmarket companies combine volumes appeals to him, but to date, the concept still seems to be floundering. "Even just a networking forum for procurement people at this level would be helpful," he says.