In an age where enterprises are more reliant upon their suppliers than at any other time in history, it is a fundamental truth that to achieve both procurement success and overall business success, enterprises must work with the right suppliers. Accordingly, it is absolutely critical for a procurement organization to identify the highest-value suppliers, an often complex challenge considering that value, as defined by business stakeholders, often has many different and unique facets, including price, quality, innovation, consistency, and capacity, among many potential others. Finding the right suppliers starts with having visibility into enterprise spend and an ability to turn that visibility into intelligence and that intelligence into tangible results.
Ardent Partners research has shown that the sourcing teams that utilize fully-automated spend analysis solutions identify more than double the amount of savings on their average sourcing projects than those performing spend analysis in a fully-manual way. Beyond the higher savings that results from the ability to make better, more-informed, data-driven decisions, spend analysis solutions drive process efficiencies across the entire strategic sourcing process. By seamlessly sharing key spend, category, and supplier performance information with a tightly-integrated eSourcing solution, a standard spend analysis system can sharpen results and improve the overall quality of a sourcing process by ensuring that timely and accurate information is available to a sourcing project’s different stakeholders, including the sourcing team, decision-makers, budget holders, and incumbent and prospective suppliers.
Best practices in Supplier Identification include:
- Use of automated spend analysis to achieve enterprise-level spend visibility and a clear understanding of what has been spent, where, when, and with whom
- Possession of strong supply market analysis capabilities to understand market trends, anticipate shifts, and increase sourcing agility
- Active application of robust supplier discovery techniques to identify new suppliers (and supplier innovation) in the fast expanding global marketplace
- Heavy use of eSourcing tools to speed the sourcing process and improve results via a more competitive process, while capturing sourcing, supplier, and category knowledge
- The development and use of strong sourcing strategies that includes the use of RFIs and the consideration of non-price attributes in the award of supplier contracts
Final Thoughts
Business pressures and needs have changed over the past five years such that product life cycles are shorter and market swings are wider than ever before. The pace of business has increased to the point where many enterprises realize that they can no longer afford to go it alone. To compete and win in today’s market requires better collaboration with the strongest suppliers, making supplier collaboration a critical strategy for Chief Procurement Officers trying to drive their business to the next level. To fully harness the power of their suppliers, procurement teams need to understand and enact the best practices in supplier management so they can identify and manage the suppliers to optimal success and impact.
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