I find it interesting that Ardent Partners’ recently published research report, Sourcing in the 2010s: The Formula for Success (registration required), is, at its core, a report about spend analysis. Maybe all of current procurement research is really about spend analysis (or at least, should be) because procurement departments with enterprise-level spend visibility have a truly powerful asset that can be used to drive strategic planning, refine operational focus, and improve business results. As we have discussed previously, visibility into enterprise spend is the foundation for procurement excellence. One of the many things that spend visibility enables is sourcing success. In the report (provided by BravoSolution), we define the formula for sourcing success as:
Visibility + Analysis + Process = Success
Enterprise-level spend visibility, while critical, is only the genesis of the sourcing process – so, let’s look at the other two elements of teh formula.
Analysis
Visibility into enterprise spend that is timely, well-organized, and accurate can be an extraordinary asset to any sourcing group. But the value that can be extracted from this visibility is only as significant as the ability of that group to analyze the spend, make the right plans, and take the right actions. To consistently derive full value from spend visibility, sourcing teams need a blend of three types of analytical capabilities or expertise: data analysis, category management, and supply market expertise
Process
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 Formula
The “Formula for Sourcing Success” can help sourcing teams build the necessary tools and capabilities to drive consistent and sustainable high performance. It starts with spend analysis: those groups that utilize spend visibility as the core component to their sourcing process and are able to take consistently smart action on it, while leveraging automation, will fast-track any procurement transformation and see significant, broad-based, and long-lasting benefits.
Check out the report; let me know what you think…
