Why Large Enterprises Are Embracing Strategic Sourcing

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Why Large Enterprises Are Embracing Strategic Sourcing

Change can be hard. Moving from a procurement organization that has historically focused on tactical sourcing metrics to one that is credited with impacting a company’s financial performance takes time, effort, and investment. A well-conceived strategic sourcing roadmap is essential, while the ability to change on a dime — to seize an opportunity or overcome an unexpected obstacle — is equally indispensable. The largest and most sophisticated enterprises today are turning to strategic sourcing best practices to extract the greatest business value from their suppliers.

New platforms enable powerful strategic sourcing

Strategic sourcing has evolved considerably over the last two decades, thanks largely to the emergence of new sourcing software platforms that enable better processes. These new platforms, which started out as simple e-negotiation platforms, have evolved into comprehensive platforms that support the entire strategic sourcing lifecycle through CLM (contract lifecycle management) and SRM (supplier relationship management).

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These new platforms bring greater consistency and efficiency to sourcing across an organization. They enable an organization to advance quickly from the classic three-bids-and-a-buy sourcing process — that is largely manual and relies on fax and email to conduct simple bidding — to a modern, value-focused, advanced tender sourcing process that can incorporate the costs, benefits, and risks across all viable vendors locally, regionally, and globally.

The value of strategic sourcing can come in the form of savings, value-add services, risk-minimization and resiliency, as well as better supplier relationships. Strategic sourcing is not static, rather it is an evolving process that matures and adapts as the needs of the organization change.

Large enterprises must evaluate deals on multiple criteria beyond price

As your organization grows larger and sourcing becomes more sophisticated, you need to consider multiple criteria beyond just price. Today’s modern sourcing software makes this not just possible, but fast and efficient. For example:

  • Analyze price and non-price details for the best mix of suppliers and goods/services.
  • Ask unlimited “what if” questions during scenario analysis to explore all possibilities.
  • Achieve CSR mandates around diversity, inclusion, and the environment.
  • Use expressive bidding that enables suppliers to provide creative, innovative offers.

With the capabilities gained by deploying strategic sourcing tools, you can dramatically power up sourcing analytic capabilities to quickly evaluate more criteria at scale, develop new suppliers to avoid monopolistic capture and increase resiliency, and differentiate with supplier-led innovation to reap previously untapped value.

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Develop new suppliers to avoid monopolistic capture and increase resiliency

A competitive supply market is good for buyers. When options are limited, the supply market consolidates, providing increased negotiation power to the few suppliers remaining. There’s also board-level, enterprise-wide mandates for inclusion and sustainability that can’t be ignored and must be substantiated, including giving contracts to minority, diverse, and eco-friendly businesses. Strategic sourcing tools help the largest of enterprises efficiently validate, award, and onboard new suppliers that meet a variety of criteria, creating a more robust sourcing process and a supply chain with more resiliency.

Differentiate with supplier-led innovation to reap previously untapped value

If what’s being supplied is critical to your product, can a supplier innovate with you? For example, breakthrough new product packaging for PG&E and Heinz came from supplier innovation, including the move to convenient squeeze bottles and packaging a measuring cup with detergent.

Accelerate your evolution to strategic sourcing

Nimble organizations have a distinct competitive advantage. With the vast quantities of data available, the organizations that can analyze large datasets quickly will differentiate themselves in their markets. It is essential to use a diversified strategic sourcing solution with the flexibility to source all types of goods and services as well as with the analytical power to bring clarity to the vast amounts of data generated in modern strategic sourcing events.

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