Manufacturers utilizing manual processes to source the direct materials that comprise their products have an extraordinary opportunity to leverage automation and drive great value across the enterprise. And yet, while the value proposition of an eSourcing solution is straightforward, articulating and presenting a business case for a solution can be complex, time-consuming, and difficult. To help procurement and sourcing executives and their teams accelerate this process, Ardent Partners has developed a robust “Business Case Framework” that includes eSourcing specific content, independent research, and easy-to-follow directions. Click here to read our “Introduction”, “Executive Summary”, and “Problem and Opportunity“. This week we cover “Current State”.

Current State

Use this section to describe the organization’s current sourcing process as clearly and succinctly as possible. Identifying the organization’s pain points (as described above) within the current process can help point the decision-makers towards your desired solution and make a strong case for it.

In many ways, the manual sourcing process in place in our enterprise today, resembles the children’s game “Telephone” which involves numerous children in a chain (or stakeholders in a process) communicating a story (or sharing requirements and capturing bid information) by whispering what they just heard to the next child (sharing and capturing information in a linear, non-collaborative, cumbersome, and wholly inefficient process) until the last child shares a completely different story that what was begun (delivering sub-optimal results).

More specifically, in our current environment, when the engineering team chooses to engage the sourcing team, it communicates that it has a final or near-final specification by sending over a design document or spreadsheet with the currently available information and a request that final bids and/or prototypes or samples be received by some definitive date. The time available for sourcing is often less than amount of time needed to properly source the contract, leaving little time for internal collaboration that could help rationalize requirements or consider alternatives. Tight time constraints can also limit a supplier’s ability to participate in the bid. Communication is generally managed by email while spreadsheets are used to share requirement and capture bids.

Since the manual process limits visibility across the entire process, inconsistent and conflicting information can begin to leak across the chain. The inability to centralize specification and bid information makes it difficult to compare bids or share and/or fairly weigh the different opinions and views of internal stakeholders. Additionally, the non-standardized nature of internal and external communication makes it difficult to share specification or order changes in a fair, accurate, and timely way to all suppliers. The manual nature of the bid collection process makes it highly challenging to understand the total cost of ownership (“TCO”) of any single bid. Finally, the timing, visibility, and communication constraints of our manual process often turn what should be a highly strategic process into a tactical one that generates sub-optimal results.

RELATED RESEARCH

Creating a Business Case for Sourcing Automation – An Introduction

Creating a Business Case for Sourcing Automation – Executive Summary

Creating a Business Case for Sourcing Automation – Problem and Opportunity

Tagged in: automation, Business Case, Chief Procurement Officer, CPO, Sourcing, Technology