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Collaborative Sourcing Reduces Costs & Time

Increasingly, the supply chain and procurement departments are turning to digital solutions, rather than traditional manual systems, to maximize results. Recent research points to a substantial potential upside.

The 2014 Project & Procurement Management Benchmark Report, sponsored by Noosh, found that online collaborative sourcing platforms, which allowed multiple bidding on a centralized platform, saved organizations an average of 20.7%, when comparing the lowest estimate with the average of all estimates. The report analyzed data from hundreds of global brands representing nearly $12 billion in project management transactions spanning marketing and print services, engineering services, major syndicated media, and enterprise shared services.

“The supply chain function lends itself to the use of tools, like email and spreadsheets, but we are seeing a trend in the marketplace where SaaS is beginning to replace these old tools en masse ,” Mark Tiedens, vice president of marketing and customer operations at Noosh, told EBN.

The study, which focused on collaboration in the purchase of services, has a corollary in buying all types of electronics, especially as organizations grapple with tracking sustainability and adherence to legislative mandates, such as Dodd-Frank's conflict minerals reporting requirements. “If you have some scale, you can start to build predictive analytics around the industry to help people drive business processes,” Tiedens said. “It's possible only because of the multi-tenancy of SaaS. Without these platforms, all of the IP is locked away in spreadsheets, and it's impossible to do analytics. The potential is yet to be imagined.”

Other findings from the survey:

  • Optimal savings will come when you get four to six estimates per project.
  • More complex projects with higher value are more likely to benefit.
  • Projects have become “48% more complex” over the past four years.
  • Turn times have held steady, with 60% of projects being completed in 29 days.
  • Fifty-one percent of all orders have fewer than 1,000 pieces.

Other benefits of collaborative sourcing may be less obvious. “I believe if you get the whole supply chain on a platform, the requirements are clearer, and you have fewer change orders,” Tiedens said. “If change orders aren't controlled, they are painful and happen more often. If you have the right tools, you can manage change better.”

Does your organization use collaborative sourcing? What lessons have you learned?

11 comments on “Collaborative Sourcing Reduces Costs & Time

  1. Eldredge
    October 2, 2014

    @Hailey – Yes, my company has used, and is using collaborative sourcing. I don't know the details, but it has been beneficial.

  2. Susan Fourtané
    October 3, 2014

    Eldredge, 

    Collaborative sourcing needs connected technology. 🙂 

    -Susan

  3. FLYINGSCOT
    October 3, 2014

    I found it quite interesting to hear that one only needs 4 to 6 quotes to get a very competitive bid.  I alwasy that the more the merrier but this is useful info to have.

  4. Eldredge
    October 3, 2014

    @Susan – Fortunately, that is the responsibility of my purchasing department! I am ill equiped to handle the task at the moment.

  5. _hm
    October 3, 2014

    How about quality and requirement for approved vendor.

    Coolabrotive may be good for commodity items, but not for most other items. Quality control and vendor approval is more significant aspect.

  6. Susan Fourtané
    October 4, 2014

    Eldredge, 

    Oh. Just when I was going to prove my point. :/

    How do you see it has been beneficial for your company?

    -Susan

  7. Eldredge
    October 4, 2014

    @Susan – My company has been able to acquire some specialized products/services at a more attractive price than previously experienced. That directly helps the bottom line for my business unit.

  8. Susan Fourtané
    October 5, 2014

    Eldredge,

    Certainly a great benefit that influences the company positively in every aspect. 

    -Susan

  9. Ashu001
    October 6, 2014

    Eldredge,

    Its a true situation in most Firms;Inspite of having very limited KNowledge/Expertise the Purchaing Department takes on too much Responsibility in Such Critical Decision-making.

    It would help everyone a lot of this was more interaction and Input from Engineering Department there.

     

  10. Eldredge
    October 11, 2014

    @tech4people – I agree. I'm not sure that I know how to implement it, but more collaboration between Purchasing and Engineering could yield substantial benefits. Any suggestions?

  11. Ashu001
    October 30, 2014

    Eldredge,

    You will need Cross-Functional teams with more than member of each Unit in every team.

    Think about it if Engineering and Purchasing are working together from the very begginning on all projects then where is the need for friction and differences over the Long-run?

    I see no reason.

     

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