Our Summer of Sourcing series continues today with a look at how sourcing departments can use technology to drive their sourcing efforts.

One interesting aspect of any sourcing program is the sheer number of processes and competencies that must be working in an efficient manner for the total effort to be optimized. Supplier discovery, eSourcing event management, contract creation and negotiation, supplier management, spend analytics, are just a few of the key areas within the strategic sourcing stratosphere that play a vital role in the contemporary strategic sourcing process. The need to manage each of those processes well while engaging and managing a series of stakeholders (i.e. budget holders and users) – not to mention a potentially large and diverse set of suppliers – throughout the entire sourcing process is one clear reason why it is important to ensure that the related processes are not only linked, but also that the systems that support those processes are connected in some way. It is also important that the entire sourcing process is efficient, scalable, and repeatable – enter technology.

Procurement departments that succeed in the consistent execution of their sourcing projects are the ones that take a holistic approach to the entire sourcing process and leverage process automation tools across it. Leading departments define their sourcing process as one that begins with opportunity identification and carries through contract execution and seek to standardize their sourcing policies and processes at the enterprise level. The tools that comprise an integrated sourcing suite include:

  • Spend Analysis: Fully-automated spend analysis tools help procurement professionals view enterprise spend and thereby better understand and take action upon it. Reports from an automated spend analysis tool should be more accurate and timely than those created in a manual process since the automated spend analysis process is more scalable and easily repeated.
  • eSourcing: eSourcing applications automate the supplier negotiation process and are among the most powerful supply management solutions available today. Price discovery, process efficiencies, bid evaluation analysis and optimization, and improved stakeholder visibility are among the benefits that eSourcing users typically report.
  •  Contract Management: Automated contract management systems serve as repositories for executed contracts and can also be used to manage the contract creation process. Benefits of automated contract management systems include an ability to standardize contract language, track and measure compliance to contractual payment terms and service levels, streamline processes, and better assess supplier performance and risk across the portfolio of contracts.
  • Supplier Performance Management (“SPM”): Automated SPM systems help enterprises rate and grade a supplier’s performance across all aspects of its products, services, and contractual obligations. Users of automated SPM can utilize the tool to develop supplier surveys and scorecards that track performance and collaborate with internal stakeholders and suppliers to improve performance.

Standardized processes help drive efficiencies and enable teams to leverage knowledge and best practices across operations. By linking their spend analysis, eSourcing, contract management, and SPM processes and systems, enterprises are also able to improve the consistency and flow of information and data during the process and have a built-in mechanism to track process compliance. Chief Procurement Officers seeking to achieve these goals and improve their sourcing results should evaluate integrated sourcing suites from the likes of BravoSolution, GEP, Iasta, IBM, Oracle, SAP / Ariba, Zycus (While these are the largest providers in the space, there are, of course, others).

Towards the end of the summer (of Sourcing!), Ardent will be publishing research that analyzes both best practices and the solution provider landscape. More on that soon.

For now, keep checking back here as our Summer of Sourcing continues.

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