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- December 03, 2015
Are you and your team sourcing everything you could? In most organizations, the answer is no. E-sourcing software can dramatically improve your team’s productivity, and if you don’t have it, stop reading right here and go out and buy it and learn how to use it. Otherwise, you won’t be able to put the rest of what I’m about to recommend into practice.
If you’re still reading, let’s assume you have an e-sourcing solution, and you and your sourcing team have mastered it and are doing great work. In fact, you’re doing such great work that people all over the company are knocking on your door for help. You’re hitting all the big categories, but you know there are still a lot of categories unaddressed, but you just can’t get to them. You could run a lot more events if only you had the time and resources.
This is a great problem to have. Many sourcing groups struggle to get to a pull situation where people see them as a resource and are reaching out proactively. Now you have an opportunity to capitalize on that engagement and extend the reach of your sourcing organization even further. How? By setting up a process and letting business users conduct their own simple sourcing events using your software.
You and your team will still manage the most strategic and highest spend categories. But if you’re willing to teach, train, and let go and trust, you can build an organization-wide self-service sourcing juggernaut racking up savings under your supervision. By following these four best practices you can turn the uninitiated into self-service sourcing superstars.
- Automate governance and compliance. Lots of sourcing organizations fear letting business people source because of all the policies and conditions they’re responsible for to do fair and compliant sourcing. With e-sourcing software, you can control compliance by providing templates set up by your team. As long people use your templates when they run events, they’ll adhere to company policies without even thinking about it.
- Source well-defined items. Items with clear and detailed specifications such that you can get apples-to-apples bids are good for beginners to try their hand at sourcing. These will usually be items you’ve bought before where there’s a clear bill of goods, or highly commoditized items where they’ll likely be buying on price. It doesn’t really matter if it’s direct materials, or indirect, or even services. Anything can be sourced if it’s defined well enough. But if you’re working on a new concept, or don’t know exactly what you want, leave that to someone on the sourcing team who can work closely with manufacturers to develop prototypes and work toward defining specifications. Once that part is done though, you might be able to turn it over to end-users to source.
- Turn them loose in a favorable market. If you’re looking to buy polyester and the price of raw materials such as oil is going way up, it's going to be more difficult to get competitive bids. There are ways to work with suppliers in a market like that, but it takes category, sourcing and negotiation expertise. Let beginners source in a buyers market, but leave sourcing in unfavorable markets to the pros.
- Make sure there are enough suppliers. In specialized categories, there is often only one viable supplier. That’s not a category beginners can negotiate easily. Ideally, there should be a minimum of three viable suppliers for sourcing newbies to run a successful event.
Almost every company has areas of unaddressed spend, or areas that are being sourced but you’re not capturing all the savings you could. E-sourcing software can increase the capacity of your sourcing team, but even with the best tools and team there’s likely still more you can do. To really address the long tail of spend, empower business users to do some of their own sourcing. Set some minimum and maximum dollar amounts for what they’re allowed to source. Automate compliance, and select the right categories for them to start with. Hold their hands for the first few events. Then let them loose and use your software to watch their skills, spend under management and savings grow.