While the phrase “wave of change” has nice dramatic effect, it doesn’t always work out that way. Take sourcing, for example: While 70% of large organizations have e-sourcing tools, many have not adopted and begun utilizing these tools. Meanwhile, 30% still rely on manual sourcing methods. Change can range from disruptive to downright difficult — but what’s even more scary is the true cost that manual sourcing has on the business.
A recent study by Harvard Business Review in partnership with Scout RFP showed that many businesses are still using manual processes to execute non customer-facing business functions — including procurement practices. As the report points out, this lack of technological integration and automation is “particularly problematic given the increasing pressure to run the business efficiently, make strategically aligned decisions around the globe, provide valuable insights, and improve collaboration across the board.”
The lack of advanced technology and automation in sourcing strategy poses a problem for businesses, but it’s one that can be easily remedied. By investing in e-sourcing technology, sourcing teams have the opportunity to provide more transparent outcomes across all business functions and meet finance at the center of business strategy. Some businesses could see up to 400% return on investment (ROI) increase — or more — after implementing more strategic sourcing and procurement practices, according to the HBR report.
There are more benefits to digital technology advancements than just streamlining your business process. Not only are manual processes holding businesses back from innovation, but, crucially, they are also costing businesses in ways that may not be directly noticeable, such as:
Comparing vendors manually can take weeks — sometimes months — to find the best pricing options for your business. A strategic sourcing platform allows procurement and finance teams to collaborate throughout the sourcing process, from selecting the best supplier to identifying savings opportunities. Complete visibility and a streamlined supplier selection process make this possible.
Lack of cross-functional decision making
By putting finance and procurement on the same page, both departments can work hand-in-hand to evaluate the business as a whole and drive decisions that will benefit the entire company. Advanced technology provides the opportunity for cross-functional collaboration, leading to an overall business sourcing strategy that drives positive ROI.
Inefficient labor hours
Successful procurement organizations run three times more e-sourcing events than others annually, saving them time and money, according to an Aberdeen report. Through a strategic sourcing platform, experts can focus their time on more strategic initiatives rather than time consuming administrative tasks. By putting these automated tasks on cruise control, procurement and finance leaders can focus their knowledge on strategic projects that will impact the business as a whole.
E-sourcing saves more than just time for businesses. As the HBR report reminds us, it can “bring together previously siloed personnel and processes, remove resource-intensive and error-prone manual interventions, provide end-to-end visibility into sourcing projects and performance, facilitate an enterprise-wide sourcing methodology, and allow both internal and external stakeholders to work together effectively in real time.” Whether you count yourself among the 70% of businesses who have the technology already at your fingertips, or 30% who do not, it’s time to begin more strategic sourcing practices that will drive bottom-line success.