In the previous blog, I discussed the new definition of strategic sourcing as proposed by Ardent Partners.
Moving onto the adoption of sourcing technology.
To be strategic, companies need to leverage technology. A sourcing process that bypasses process automation fails to connect the dots and leaves an unfinished picture. Business process automation are central to the modern strategic sourcing program and help executives to discover sourcing opportunities from enterprise spend, find preferred vendors and manage their performance and ensure process compliance.
The core elements of strategic sourcing comprises of eSourcing, spend analysis, contract management and supplier performance management.
Let’s look into each of the four core elements of strategic sourcing.
Spend analysis tool – enables companies to analyze historical spend, which can uncover a wealth of useful information. A “drilling tool”, it allows sourcing executives to tap into the power of data, and aggregate, cleanse, and classify it for maximum spend (and supplier) intelligence.
As per the recent Ardent Partners study, nearly 40% of enterprises currently use automated spend analysis.
eSourcing tool – enables enterprises to complete the entire sourcing or supplier bid process within one consolidated system, wherein they can identify, evaluate, and negotiate for the goods and services needed to support the business. Teams can pull in spend intelligence data to make better educated sourcing decisions.
As per the Ardent Partners study, 46.3% sourcing professionals use eSourcing tools.
Contract management tool – acts as a single systems of record for all contractual documents related to a given sourcing program. It can make or break the efforts put in at the sourcing stage by connecting the dots between supplier negotiation and contract execution. It also helps to keep a check on maverick spend.
The Ardent Partners study says, 47.4% enterprises plan to use it while 25.6% currently use it.
Supplier performance management tool – gives organizations visibility into the effectiveness of an enterprise’s entire supplier base. SPM solutions can be critical in today’s procurement world as sourcing teams must carefully manage an array of suppliers across multiple industries, geographies, and, frequently, contracts with unique milestones, delivery dates, and quality parameters.
Ardent Partners study says, 54.4% enterprises plan to use it while 22.1% currently use it.
In the next blog I’ll discuss the strategies for best-in-class sourcing organizations.
For detailed reading you can access the complete Ardent Partners report on The State of Strategic Sourcing by clicking on the download button below.
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