Strategic Sourcing Software for Competitive Advantage

7-Step Strategic Sourcing Process

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By looking at the flow of strategic sourcing, it is easier to understand how it differs from conventional sourcing or vendor picking.

1. Spend Analysis. The first step to do is planning. This involves gathering the necessary information regarding what product is bought, in what quantity and what the budget is.

2. Market Research. This step involves taking a close look at the market dynamics and trends and creating a supplier portfolio to prepare for future negotiations.

3. Define sourcing approach. Work with teams involved in the souring process to determine your company’s goals and unique selling points and analyze them to see if there are any supplier alternatives to the current ones.

4. Create sourcing events. Conduct thorough research into existing and new suppliers to participate in the bidding process. You can also request proposals regarding specific information like products, legal terms, delivery, etc.

5. Evaluate Bids. After having set up a timeframe for bid evaluation, you and your team should go through and compare the bids side-by-side. Often there are several rounds of negotiation involved before the final decision.

6. Select and Integrate Suppliers. After the selection process, you work to integrate suppliers into the existing operations. During this process, both parties often establish communication channels for effective collaboration.

7. Monitor and optimize. Continuous monitoring of your supplier is needed to make sure all the demands are met. The strategic sourcing plan should be reviewed and adjusted regularly.

Benefits of Strategic Sourcing Solution

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Manually handling numerous tasks in the source-to-contract process proves to be error-prone. Beyond a tool to keep up with the extensive digital transformation surge, strategic sourcing solutions can elevate your business operation as a whole and impact the bottom line positively.

Reduced Costs and Risk

Effective strategic sourcing reduces costs and risks in the procurement process. The software stores and analyzes a multitude of information regarding the supplier, e.g. supplier performance in the past or terms they are willing to negotiate. Paired with spending management features and a strict compliance checklist, organizations increase the probability of acquiring high-quality goods and meeting performance benchmarks.

Improved Efficiency

Data can become an organization’s superpower. Robust strategic sourcing software can be your superpower by uncovering frauds, eliminating errors, and continuously providing you with helpful insights that enhance the efficiency of the source-to-pay process.

Increased Transparency and Collaboration

The software acts as a central information hub. Relevant stakeholders can access and compare suppliers quickly and conveniently, identify supplier risk, and push the discussions forward faster.

Better Supplier Relationships and Performance

Strategic sourcing software is considered part of supplier value management platforms (SVM). This means one of the strategic sourcing goals is to maximize the supplier’s value by continuously managing and improving supplier relationships and performance throughout the entire supplier lifecycle.

Flexible RFx Functionality

Strategic sourcing software should be able to generate RFx. RFx stands for “Request for Anything,” and “X” stands for anything. RFP (Request for Proposal), RFQ (Request for Quote), and RFI (Request for Information) are all included under RFx.This process automation saves your team a lot of time and energy.

Supplier Management

Procurement projects involve numerous suppliers. Supplier management functions lead to easy onboarding processes, performance and transaction tracking, and more effective supplier collaboration.

Purchase Order and Inventory Management

In addition to providing visibility into the purchase lifecycle, purchase order (PO) management is a way to track inventory levels. It makes sure that businesses don’t overorder or order too late and that the customer’s needs are always met.

Contract Management

Contract management is more than storing and tracking performance metrics. The feature handles end-to-end agreements to ensure compliance and maximize value from the contract lifecycle.

Spend Analysis

A key benefit of sourcing software is cost reduction. By providing businesses with a comprehensive picture of spending patterns and supplier prices, businesses have a clearer idea of consolidating suppliers, asking for bulk discounts, or even re-negotiated terms. In a way, this feature also functions as a savings tracking dashboard.

Mobile Access

Allowing mobile success further boosts productivity since it is convenient - staff can access the dashboard anytime.

Data Analysis

Data analysis is another must when it comes to sourcing software. Raw material fluctuations, trends forecast, customer feedback and demand analysis along with spending analysis will provide users with a comprehensive picture of sourcing practices.