If you’re going to bring procurement to the attention of senior management – not to mention demonstrating value beyond just cost-cutting measures – then you’ve got to recognise the benefits inherent in adopting strategic sourcing. And if you truly want to wring the most benefit out of strategic sourcing, you have to include e-sourcing in the process.
But implementing an e-sourcing solution doesn’t mean you’ve automatically adopted strategic processes. E-sourcing is simply a tool. No more, no less. And while switching from Excel to more streamlined software solution can’t fail to benefit your organisation, it’s the underlying processes that show the true advantages e-sourcing can bring to the table.
But implementing an e-sourcing solution doesn’t mean you’ve automatically adopted strategic processes. E-sourcing is simply a tool. No more, no less. And while switching from Excel to more streamlined software solution can’t fail to benefit your organisation, it’s the underlying processes that show the true advantages e-sourcing can bring to the table.
Benefits of Strategic Sourcing
First, there are cost benefits. Simple enough.
Second, strategic sourcing can help procurement leverage its value to help organisations meet a broad range of business objectives, such as sustainability and socio-economy, through buying locally from small businesses or by meeting ‛green’ purchasing requirements.
Third, strategic sourcing initiatives often reduce supply chain risks. Organisations become more proactive in their sourcing decisions, so they can plan and manage risks ahead of time rather than dealing with them ad hoc.
Overall, strategic sourcing converts procurement into a more valuable function:
Organisations now consider a broader range of KPIs, for instance cost, but also the big-picture total cost of ownership (TCO). A product’s acquisition accounts for about 25%–50% of the TCO. Strategic sourcing, allows organisations to consider the factors accounting for the balance of that TCO – transportation, warehousing, maintenance, inventory, etc. Take inventory, for example. It’s tied to net working capital (NWC), so a lower inventory level means better NWC and improved cash flow.
Benefits of e-Sourcing
The Hackett Group’s recent e-procurement poll found e-sourcing led to improvements in the following areas:
Hackett predicts that as more organisational spend comes under management, companies will see an increase in savings owing to gains in compliance, cycle time and data management.
E-sourcing is an essential part of procurement best practice. According to Aberdeen’s recent survey, 68% of best-in-class organisations use e-sourcing. With all the benefits that have been shown over the past 20 years, any company striving to achieve procurement savings must implement e-sourcing.
5 Tips for Getting Managements Attention
Implementing strategic sourcing processes involves change management. And adding e-sourcing is essential for getting the most out of your strategic sourcing processes. It involves more investment and approval from the budget holder, here are some tips to help you get senior managements attention with e-sourcing adoption.
1. Explain your pain
Oftentimes, senior management may not realise how lack of current technologies is affecting you and your team’s everyday performance. After all, they only see the end result of your work – not what it took to get there! If you can show how the output will be noticeably better, they’ll likely agree to invest in the necessary process improvements.
2. Show me the money
In the movie Jerry Maguire, Tom Cruise famous quote "Show me the money!" is what senior management will be saying to you. With procurement playing an essential role in achieving business objectives, cost saving is still one of the greatest motivating factors. Implementing a low-cost SaaS solution has broken down barriers to e-sourcing for organisations, especially for small and medium enterprises (SMEs) – meaning increased Return-on-Investment (ROI). And don’t forget that a streamlined procurement process improves efficiency, allowing procurement professionals to focus on more strategic work, while an developing key supplier relationships.
3. Follow the leaders
Why wouldn’t your organisation want to join other best-in-class organisations in the ranks of e-sourcing adopters? There’s a reason those organisations are best-in-class – and their sourcing procedures show it. Learn from the best, and don’t get left behind with the rest.
4. Try it out
Take advantage of the various free trials offered by many SAAS e-sourcing solutions. Run an RFQ or two and have your team test them out. There’s no better way of ensuring user friendliness – and your first-hand experience will make your case much more persuasive.
5. Leverage employee buy-in
There’s power in numbers. It’s easier to convince senior management if your team is already on board. Plus, not only does taking time to persuade others demonstrate your own dedication to the project but there’ll be less work to do when it comes to ensuring high user adoption
Please share your experience
I'd like to hear about your experiences implementing strategic sourcing and selling the benefits of e-sourcing, good or bad. Please drop me a line or two at the comments box below. Looking forward to your feedback!
First, there are cost benefits. Simple enough.
Second, strategic sourcing can help procurement leverage its value to help organisations meet a broad range of business objectives, such as sustainability and socio-economy, through buying locally from small businesses or by meeting ‛green’ purchasing requirements.
Third, strategic sourcing initiatives often reduce supply chain risks. Organisations become more proactive in their sourcing decisions, so they can plan and manage risks ahead of time rather than dealing with them ad hoc.
Overall, strategic sourcing converts procurement into a more valuable function:
Organisations now consider a broader range of KPIs, for instance cost, but also the big-picture total cost of ownership (TCO). A product’s acquisition accounts for about 25%–50% of the TCO. Strategic sourcing, allows organisations to consider the factors accounting for the balance of that TCO – transportation, warehousing, maintenance, inventory, etc. Take inventory, for example. It’s tied to net working capital (NWC), so a lower inventory level means better NWC and improved cash flow.
Benefits of e-Sourcing
The Hackett Group’s recent e-procurement poll found e-sourcing led to improvements in the following areas:
- Compliance with indirect preferred contracts increased by 20% on average.
- Number of orders processed per buyer increased by an average of 38%.
- Data management efficiency increased by 15% on average.
Hackett predicts that as more organisational spend comes under management, companies will see an increase in savings owing to gains in compliance, cycle time and data management.
E-sourcing is an essential part of procurement best practice. According to Aberdeen’s recent survey, 68% of best-in-class organisations use e-sourcing. With all the benefits that have been shown over the past 20 years, any company striving to achieve procurement savings must implement e-sourcing.
5 Tips for Getting Managements Attention
Implementing strategic sourcing processes involves change management. And adding e-sourcing is essential for getting the most out of your strategic sourcing processes. It involves more investment and approval from the budget holder, here are some tips to help you get senior managements attention with e-sourcing adoption.
1. Explain your pain
Oftentimes, senior management may not realise how lack of current technologies is affecting you and your team’s everyday performance. After all, they only see the end result of your work – not what it took to get there! If you can show how the output will be noticeably better, they’ll likely agree to invest in the necessary process improvements.
2. Show me the money
In the movie Jerry Maguire, Tom Cruise famous quote "Show me the money!" is what senior management will be saying to you. With procurement playing an essential role in achieving business objectives, cost saving is still one of the greatest motivating factors. Implementing a low-cost SaaS solution has broken down barriers to e-sourcing for organisations, especially for small and medium enterprises (SMEs) – meaning increased Return-on-Investment (ROI). And don’t forget that a streamlined procurement process improves efficiency, allowing procurement professionals to focus on more strategic work, while an developing key supplier relationships.
3. Follow the leaders
Why wouldn’t your organisation want to join other best-in-class organisations in the ranks of e-sourcing adopters? There’s a reason those organisations are best-in-class – and their sourcing procedures show it. Learn from the best, and don’t get left behind with the rest.
4. Try it out
Take advantage of the various free trials offered by many SAAS e-sourcing solutions. Run an RFQ or two and have your team test them out. There’s no better way of ensuring user friendliness – and your first-hand experience will make your case much more persuasive.
5. Leverage employee buy-in
There’s power in numbers. It’s easier to convince senior management if your team is already on board. Plus, not only does taking time to persuade others demonstrate your own dedication to the project but there’ll be less work to do when it comes to ensuring high user adoption
Please share your experience
I'd like to hear about your experiences implementing strategic sourcing and selling the benefits of e-sourcing, good or bad. Please drop me a line or two at the comments box below. Looking forward to your feedback!
