At least one of the scariest goblins of today's supply chain is the specter of making poor sourcing decisions. Today, though, strategic sourcing applications can make everyone feel safer.
"Procurement has historically been measured on cost savings delivered and in some cases cost avoidance," Richard Waugh, vice president of Corporate Development at Zycus, a vendor of procurement solutions, told EBN in an interview. "Now, procurement is tasked with forging closer relationships with supply partners, and with finding ways to drive value through innovation with suppliers by gaining efficiency through the supply chain." In addition, procurement must contend with navigating supply risk by having a keen understanding of how suppliers are performing, he added.
On Thursday, Oct. 31st (the scariest American holiday of Halloween, making it a great day to discuss taking the fear of failure out of procurement), we'll be gathering with Waugh as our guest to discuss the latest and greatest capabilities in the growing market of strategic sourcing applications.
These apps offer a variety of capabilities, including e-sourcing, contract management, supplier base management (SBM), and spend analysis. Some vendors add additional capabilities: category management, supplier directories, commodity risk management, and business services, for example.
More than being a popular buzzword, strategic sourcing allows the procurement organization to demonstrate clearly the value that they bring to the business. "The big challenge is that the procurement group is tasked with identifying sources to meet the business requirements and putting those through the process of negotiating agreements that result in identified or potential savings," said Waugh. "It was much harder to track post contract negotiations from identified to realized savings."
In addition, these solutions help procurement organizations track and enforce compliance with negotiated agreements, to help promised savings reach reality. "It's a big focus for procurement to demonstrate and document the value being contributed to the business," Waugh said. "That ultimately elevates the role of procurement."
Further, strategic sourcing creates better collaboration within the organization, such as between the design engineers and procurement. The system allows procurement to get engineers and other stakeholders involved earlier in order to clearly define requirements.
We'll be talking about these advantages and others (supplier base consolidation, more effect negotiations, etc.), as well as what organizations should think about when choosing a strategic sourcing solution. Should we choose cloud-based or on-premises? What are the must-have and nice-to-have features? How will these solutions evolve along with the organization?
Bring your thoughts and questions and join us in EBN's chat room at 11:00 a.m. PT / 2:00 p.m. ET on Thursday, October 31st. We hope to see you there.