Recently, head of Toshiba’s procurement function has been made the CEO. This instance again confirms procurement’s growing importance within the organization. The advent of technology has changed everything around us – the way we communicate, we shop, we live and the way businesses operate including sourcing.
In this 3 part series we would attempt to explore the shift in sourcing process and how it can be further improvised using technology.
Sourcing process has evolved from merely finding, evaluating and engaging suppliers to a more sophisticated one, deemed as strategic sourcing wherein; the sourcing process is continuously evaluated and improvised.
Traditional sourcing process was highly manual – paper based and too reliant on excel. This practice in today’s era would present the organization with host of problems like;
- Non-standard processes
- Lack of scalability
- Lack of overall visibility into the sourcing process
- High cycle time, etc.
So what has made the traditional paper and excel centered sourcing process redundant?
- With globalization, the world has become smaller and the supply chain longer. It is spread across countries with tiers of supplier and thus become more complex.
- With increasing R&D and constant changes in customer preferences, the product life cycle is becoming shorter.
- Increasing competition and price wars have ensured tight margins for the manufacturers, who constantly struggle between maintaining quality at the same time facing rising input cost.
- Manufacturers are shifting the factories closer to the customer base to the meet the demand faster and better. Thus organizations end up having vast supplier base. Maintaining good relation with the suppliers is a challenge and yet important.
- Sourcing is also affected by factors like natural catastrophe, political unrest, trade barriers etc.
In the next two posts we will see how the sourcing process can be redesigned with the help of technology, to perform better.
