[Editor’s Note: We continue our “Flashback” series with a look at how improved technologies can transform procurement]
Chief Procurement Officers (CPOs) and procurement practitioners have the need and the capability for advanced technology solutions to automate and link the source-to-settle process – upstream, strategic sourcing and downstream, procure-to-pay (P2P). Digital, automated supply management solutions can help overworked and understaffed procurement teams scale resources and extend their power and influence throughout the enterprise. It matters less where business leaders implement and drive technology adoption and more that they automate up (or down) the source-to-settle value chain; and that they link the chain for maximum value. Of course, even incremental automation can alleviate staff shortages and workloads and allow procurement to return more value to the enterprise. However, current technology adoption remains low up and down the value chain, leaving significant opportunities for value realization in the future. Let’s take it from the top.
Spend Analysis and eSourcing
In the context of strategic sourcing, fully-automated solution suites can perform much more of the heavy lifting for beleaguered procurement teams that often find themselves swimming in data, processes, and tasks. They are scalable and repeatable, take most of the manual, tactical work out of the equation, and allow small procurement teams to focus on strategic planning and improvements. For example, automated, digital spend analysis tools can aggregate, categorize, clean, and analyze internal and external data streams, and deliver distilled and actionable spend intelligence to procurement leaders and practitioners to use throughout the source-to-settle process. Indeed, they can use spend intelligence to make more informed buying decisions, understand internal and external contract compliance rates, and understand how competitive their suppliers are and if they are performing as planned.
Other automated sourcing technologies, like eSourcing, can allow procurement teams to scale their operations, conduct more sourcing events, and collaborate more effectively with their supplier base. For starters, eSourcing technologies bring buyer-supplier relationships and transactions into the digital realm where buyers can reach out to multiple suppliers at once with a single RFI, RFP, or RFQ, and then use supplier responses to competitively source a commodity or service. With reverse auctions, suppliers bid against each other for the award, and eventually arrive at the lowest price at which they are willing to perform the work. Once a sourcing decision has been made, sourcing teams can negotiate with the supplier in the tool on terms and conditions (T&Cs), service-level agreements (SLAs), price, and so on.
Sourcing teams can leverage this network of suppliers to conduct more sourcing events for the enterprise, rather than starting from scratch or conducting “three bids and a buy” outside of the process. In fact, the more sourcing projects that procurement can support links directly to value generated from the process, whether that is savings, better quality, less risk, or superior service. Here especially, eSourcing technologies offer procurement teams the scalable, repeatable, and cost-effective means to drive more value through their department.
Final Thoughts
Spend analysis and sourcing tools that are linked, standardized, and automated can be true force multipliers for understaffed and overworked sourcing teams that need actionable intelligence to quickly inform sourcing and buying decisions. Enterprises that lack the manpower (which describes pretty much every procurement organization today) to aggregate and analyze the many streams of big data pouring into the enterprise can transform the status quo to become more agile, informed, and competitive. CPOs and procurement teams facing budgetary restraints (again, just about every procurement organization today) should prioritize investing in automated spend analytics and eSourcing tools, for they can truly pay off dividends in the long term.
