3 steps to optimise strategic sourcing
Our recent research revealed that a whopping 83% of growing organizations don’t challenge their suppliers on cost or performance, leading to difficulties in managing and ensuring profitability. Common issues for procurement and purchasing teams include inconsistent performance and best practice evaluation, decentralized handling of supplier data, and contract renewal without review.
These three fundamental steps will help get your strategic sourcing strategy into shape.
1. Use eSourcing events and eAuctions
Electronic sourcing events enable buyers to automate and standardize how RFx’s are created, distributed, collected, and stored - a huge increase in efficiency compared to manual processes, which can take up to 85% more time. With consistent data formats and a more collaborative approach to electronic sourcing events, you’ll see much higher levels of document and process quality. And the automation of the entire process means you can run more sourcing events, creating more cost savings that can be reported back to the wider business.
Your stakeholders have immediate access to all the supplier data they need, and automatic alerts and reminders ensure that no one will ever miss a completion deadline.As a result, your team and your suppliers will have greater success staying on top of sourcing activities. Electronic auctions drive savings that simply cannot be achieved by any other means of supplier negotiation.
eAuctions can help you achieve significant collective price reductions across all categories against bids submitted during your sourcing processes. Using the competitive behavior driven by real-time online negotiations to your advantage, you can push for the best possible value from your supply chain. The comprehensive functionality of eAuctions allows you to quickly and easily set up and run the event, including inviting suppliers. And once the event is over, you can easily report on the results and identify the achieved savings.
2. Contract Management
Without having the right tool to effectively manage and monitor contracts, supplier agreements can continue unchallenged from year to year, locking you into increasingly poor pricing and service terms. Contract management software can help you manage any number of contracts in a secure and centralized repository that only authorized stakeholders will be able to access and edit.
Contract Management software gives you the ability to build contracts by integrating the details of preferred suppliers from eSourcing or eAuction events with the addition of custom fields to capture contract-specific data. This means that you will no longer have to spend time searching for required information, as it will be automatically populated for you.
Additionally, configurable automated alerts and reminders give your stakeholders the ability to set up renewal reminders, so a contract never rolls over without your knowledge. This software can give you more control and reduce risk of being stuck in an unfavorable contract for longer than necessary. The comprehensive reporting and powerful search tool lets you search for all information you need, whether it is specific supplier information or how many contract renewals are coming up in the next three months.
Another thing to remember is that a Contract Management solution will allow you to assign different security levels to different stakeholders, restricting what they can see or do, which increases control and decreases risks of sensitive data being compromised.
3. Track spend and savings
Even when many procurement teams have a wealth of tools and technologies at their disposal to help secure savings, when it comes to measuring and reporting on those savings against forecasts and targets, many still rely on spreadsheets. If that’s the case with you then you’ll be happy to know that there are better ways to showcase your savings progress in an effective and efficient way.
A Savings Tracker solution can enable you to quickly and easily build up saving forecasts, create tracking documents based on completed sourcing events, and deliver intuitive reports that clearly demonstrate your procurement deliverables and value.
Medius Spend Management offers a variety of modules and features that can help you achieve greater success in strategic sourcing. If you’d like to discuss your strategy in more detail, please get in touch; we’d be delighted to help.
