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    Blog Image

    Top 7 Benefits of Using an Advanced, Cloud-Based Strategic Sourcing Software

    September 24, 2019 | Sourcing Technology

    Strategic sourcing has been the go-to approach for transforming procurement from a tactical to a strategic function, capable of delivering the kind of value enterprises expect from it now. It takes a long time, even years, to be implemented properly, so it’s only natural that enterprises expect it to lead to substantial savings. Yet, this is not always the case. Savings identified and expected from strategic sourcing tools and techniques do not always translate into realized savings. Sure, innovations in technology have created sourcing management software that can fast-track basic tasks and document contracts online, but is that enough? Sadly, no.

    The actual realization of these savings comes from day-to-day efforts of the procurement organization, which help stakeholders and customers shift spend off existing contracts and away from previous suppliers, to new suppliers through the new contracts. Sustaining these savings requires putting strategic sourcing best practices and solutions in place to provide visibility into the behavior of the organization and ensuring that the chosen suppliers meet the terms of their new contracts. What market-leading enterprises need today is strategic sourcing technology that can support procurement’s transformation by analyzing spend data, identifying savings opportunities, enabling e-sourcing, and creating and maintaining a database than can help with decision-making and keep a tab on spend.   

    How the Right Strategic Sourcing Tools Help

    The current marketplace for strategic sourcing software — including spend analysis, e-sourcing, contract management and supplier relationship management capabilities — is full of tools promising transformative change. But very few can deliver true value to customers. To make the most of your sourcing initiatives, use software that:

    1) Automates Spend Analysis and Tracking: Large firms conduct thousands of transactions daily. If not accounted for properly, it is difficult for companies to track and manage direct and indirect spend. An advanced strategic sourcing platform uses analytics to cleanse, enhance, classify and analyze spend data by supplier and category. This increases item-level visibility across the enterprise — critical for not just identifying opportunities for savings, but also for supplier rationalization.
    It also significantly enhances visibility into POs, invoices and spend — so you are aware of where your spend is. Also, automated invoice matching, rules-based (can be configured to commodity-, company- or role-specific rules) payment approvals and payment processing make it difficult to make unauthorized purchases. It not only ensures visibility and compliance, but also helps enterprises leverage buying volumes to get discounts. An advanced software platform can even send out automated alerts on some of the most researched opportunities — such as increased spend in a particular category. This can help companies identify sourcing opportunities and plan accordingly. It also reduces overhead costs and delays.

    2) Enables Anytime, Anywhere Access: Software that is built on the cloud will enable all users to access the platform from their laptops, tablets or smartphones on the go — helping them share real-time updates and collaborate easily with team members or suppliers from across the globe. For instance, the software’s supplier portal can create an online communication channel with vendors and offer strategic sourcing support, which will encourage greater collaboration. This is will also enable better monitoring of supplier performance and more accurate sourcing decisions.

    3) Uses AI-based Tools for Supplier Selection: Market-leading strategic sourcing solutions now come equipped with intuitive, AI-based tools that can proactively monitor supplier performance and predict the best combination of suppliers, services and products to meet needs. Many of these have reverse auction capabilities that help you select the supplier that offers the best value. These capabilities also help enterprises manage risk better.  

    4) Connects S2P Processes Seamlessly With a Unified Platform: A unified software platform seamlessly connects different sourcing processes. It intelligently tracks all your business spend, improving visibility and contract compliance. There is no need to integrate modules and awkward bolt-ons, which provides a seamless user experience and eliminates integration costs, delays and glitches. All relevant functionality is included in a single platform for smoother information, sourcing and procurement process flow, and users can switch fluidly between tasks.

    5) Is Easy to Use: Software that is easy to use flattens the learning curve, boosts user adoption and compliance, and requires no extensive user training. It is one of the vital attributes your strategic sourcing software can have. An effective strategic sourcing software can help drive higher adoption, which can have a significant impact on savings. As an example, if your procurement software can create and distribute POs within a matter of seconds, if it can automatically fill the required details, and store them in a central repository without much human intervention, employees will prefer it over making off-contract purchases.

    6) Is Packed With Value-Added Functionalities: Make sure your software is sourcing-agnostic, that is, capable of automatically mapping data headers from multiple formats of input files. Also look for taxonomy-agnostic sourcing software as it can help you use one preferred or multiple taxonomy standards — including industry-specific, sourcing-specific and custom, enterprise-specific taxonomies — as per your requirements. And let’s not forget the quick-reference dashboard. Colorful, graphical and tabular dashboards accelerate uptake, with detailed drilldowns for supplier analysis, categories, regions and spend volume, giving you the entire picture.  

    7) Comprehensively Tracks Savings: Look for strategic sourcing software that makes it easy to plan, execute and track cost savings initiatives, consolidating all the information into a single, intuitive interface. It should help you track and report all kinds of cost savings — cost reductions, cost avoidance, rebates, gain shares and signing bonus. It should accurately capture results and measure savings performance, give you real-time visibility of all negotiated savings, and validate realized savings with finance and other stakeholders. In short, it should offer you a life cycle view of your cost-saving activities — from ideation to execution to realization — in organized, customizable and user-friendly reports, so you can gauge the success of your strategic sourcing initiatives.

     

    Tags: strategic sourcing , Strategic Sourcing Software , Strategic Sourcing Tools

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