Optimizing Sourcing Decisions for Your Business
Whether you’re an SME or a larger enterprise, optimizing sourcing decisions is likely something that is quickly becoming a priority if it’s not on top of the to-do list already. Procurement optimization helps keep things moving, keeps your team on the same page, and saves your company time and money at the end of the day.
However, figuring out how to become engaged with the strategic sourcing process may have a learning curve if it’s something you’ve never done before. Read on to learn how optimizing sourcing decisions for your business is important, the strategic sourcing meaning, and what you should look for in strategic sourcing software.
Optimizing Sourcing Decisions: What Does Strategic Sourcing Mean?
Sourcing, in general, refers to the act of sourcing suppliers and the act of supplier management. To define strategic sourcing goes a bit deeper.
Strategic sourcing is a more collaborative process that includes collecting data, spend analysis reports, and market research to source suppliers and form relationships with the best supplier(s) for your needs..
Optimizing Sourcing Decisions: What Are the Benefits of Strategic Sourcing?
SMEs especially may have some hesitancy when it comes to strategic sourcing methodology because it requires a small investment in strategic sourcing tools and the workforce.
However, the primary benefits of strategic sourcing should quickly outweigh this investment. Some benefits you’ll see from the implementation of strategic sourcing techniques include:
- Bottom line impact. Once strategic sourcing solutions are fully implemented, you’ll see an impact on your bottom line. This includes operations and control costs. This is because you’ll be keeping a closer eye on spending with analysis reports.
- Risk management. With strategic sourcing tools and techniques comes the benefit of easier risk mitigation and management. Analytics software allows you to view spend more clearly, understand spend with risk and therefore mitigate future risk.
- Happier Sourcing Team. With most strategic sourcing solutions, it takes less time and less effort to execute a thorough sourcing event, which means that your team will be happier.
- Better relationships with suppliers. Transparency and collaboration (with the best in strategic sourcing software) allow you to build better relationships with suppliers over time and have more transparency across your internal team, particularly with contract management software.
When all of these benefits add up when you’re optimizing sourcing solutions, you get the overall benefit of less time wasted and more money made, which is what any business—SME or otherwise—wants as the end goal.
Optimizing Sourcing Decisions: What Should My Software Include?
If you’re just looking at strategic procurement solutions for the first time, a look at current trends in strategic procurement management is helpful. However, there are some tools that every software suite should have. Of course, you’ll want eRFx and eAuction software, but you may want to dig a little deeper as you’re optimizing sourcing decisions.
- Spend analysis. with category breakdowns and spend oversight. You should always be aware of your spend, and any good spend analysis solution will provide you with your spend by category so you can run sourcing events on the lowest hanging fruit first.
- Automation. This may sound like a given, but the less data entry and manipulation, the better. Less time spent tapping away at the keyboard or spent creating side-by-side comparisons means more time spent fulfilling other duties.
- Collaboration and centralization. When it comes to optimizing sourcing decisions, your team should all have the same information and be able to quickly understand the cost of each operational decision that they consider. Your tools should be user-friendly enough to make this possible for most users.
- Automated & Smarter Awards. The best eSourcing solutions always include the ability to quickly run various award scenarios to quickly understand the difference between the cherry-pick or maximum savings and other more operationally friendly award scenarios such as 60% of the award remaining with incumbent suppliers.
- Mobile-friendliness. Your software must be able to work on tablets and smartphones. Especially in a post-COVID world, many people are no longer in the office. You must have mobile-friendly tools.
You can also consider whether you want procurement software with sourcing features or separate software for different needs. Sometimes it depends entirely on the size of your business and what your particular needs are.
To find out more about optimizing sourcing decisions or request a demo, contact EC Sourcing Group today at 973-936-9672. We want to help you reimagine procurement.