Automation is everywhere and procurement isn't far behind. Organizations are adopting software tools to streamline strategic sourcing activities and simplify the complexities that come with them. With technology, businesses aim to improve their sourcing capabilities and stay competitive in the ever-changing business landscape.
In this article, we delve into the realm of strategic sourcing. We uncover key market trends that discuss how organizations are maximizing ROI through automation.
Strategic sourcing serves as the backbone of procurement strategies for organizations worldwide. It represents an approach to purchasing that prioritizes the overall value provided by vendor relationships. Integrated in supply chain management, strategic sourcing focuses on tailored solutions and beneficial partnerships.
At its core, sourcing strategy involves the systematic evaluation of suppliers and negotiation of win-win contracts for goods or services. Essentially, it's a data-driven method for establishing vendor connections and driving the company's bottom line.
The strategic sourcing process is a cycle that extends beyond cost considerations. Here are the key workflows a sourcing strategy typically includes:
The former steps often require accurate manual market research, while the latter ones are increasingly automated to save procurement teams time. However, time savings are just the tip of iceberg.
Let's explore why digital tools are increasingly used in strategic planning and how they are transforming the sourcing landscape.
According to a recent Deloitte survey the breadth of procurement’s “service portfolio” is expanding, but its stakeholder-facing performance seems to be declining, particularly in terms of savings performance.
In response to the challenge, Chief Procurement Officers need to reevaluate their strategies to improve supplier resilience and maintain a competitive advantage. Thus, top-performing procurement teams, called "Orchestrators of Value" by Deloitte, are placing a great emphasis on supplier performance, supply market intelligence, and e-sourcing tools:
Another survey by KPMG reveals the extent to which various technologies are integrated into the sourcing process:
Above that, Gartner predicts that AI technologies will completely change the industry in the coming years. They anticipate that by 2026, about 20% of organizations will rely on virtual assistants and chatbots for internal and vendor interactions. Additionally, they predict that by 2027 a significant "40% of sourcing events will be executed by non-procurement staff".
As evident from market surveys, there is a growing adoption of software tools for strategic sourcing. Here are the key drivers fueling this trend:
Ultimately, eSourcing not only facilitates finding the right suppliers but also empowers various business units to collaborate on sourcing operations. This is crucial as each department often has its own unique set of sourcing requirements. Online platforms enable procurement professionals to source suppliers within their unique bounds of procurement and compliance rules.
RFQs (Request for Quotation) and eAuctions are the two tools that work together for efficient supplier selection and terms negotiation.
RFQs enable organizations to solicit bids from potential suppliers by providing detailed specifications and preset criteria. With RFQ management software, the bidding process becomes transparent, while companies receive bids from a wide range of vendors.
Similarly, eAuctions streamline strategic sourcing by providing a digital platform for real-time bidding. eAuctions eliminate the need for manual bid processing and save time on endless emails back & forth.
eAuction tools empower sourcing teams to easily compare bids, filter them by the best prices, or make custom selections. Finally, eAuctions encourage suppliers to submit their best offers, driving substantial cost savings for buyers.
Adopting tools for strategic sourcing presents notable return on investment (ROI) opportunities in procurement. With web-based platforms and technologies, businesses streamline their supplier relationship management, reduce costs, and drive operational efficiencies.
Here are some valuable findings from industry sources:
Though the statistics varies from source to source, one thing remains clear: eSourcing is a game-changer when implemented wisely.
To reap the benefits of strategic sourcing automation, organizations need a clear and consistent approach. To help you avoid chaos and mismanagement, we at Team Procure have some valuable tips to share:
There are numerous software solutions available in the market to support strategic sourcing initiatives. Some of the flexible and affordable options include:
Team Procure provides a user-friendly cloud-based platform with a variety of tools to upgrade the entire source-to-pay process. Key capabilities for strategic sourcing operations include:
Bonfire, a solution from Euna Solutions Brand, offers RFx management, bid evaluation, and supplier performance tracking features.
Promena offers eSourcing and eProcurement solutions, including tools for supplier selection, negotiation, and contract management.
The company provides a procurement platform for managing reverse auctions, RFx processes, and purchasing.
Many companies are now using eSourcing tools to negotiate better deals with suppliers and optimize their overall procurement expenses. With the ability to access a larger pool of vendors and track their performance, companies are able to improve the quality of their purchasing and make more informed decisions.
Team Procure is at the forefront of this movement, providing a platform designed for businesses across manufacturing, construction, and other industries.
To witness the transformative opportunities we offer, schedule a personalized demo today. Get a free tour of how our software solutions elevate strategic sourcing and get access to a free trial!