Here's what we'll cover:
Strategic sourcing supports the information-gathering process that takes place before actual purchases are made. Whereas procurement software is more traditionally associated with the actual monetary transactions of purchasing, sourcing software is concerned with accumulating the data necessary to make smart and informed purchases.
Sourcing provides buyers with access into a vast system of supplier databases, which makes it easier to pre-screen supplier data and analyze suppliers’ past successes and failures. Along with procurement and demand planning solutions, sourcing systems help organizations make intelligent decisions and is therefore a key element of supply chain management systems.
Strategic sourcing software takes managers through the following steps of the strategic sourcing process:
|Spend analysis||The first stage of strategic sourcing is for the system to initiate an initial spend analysis to identify areas in which spend could be decreased through new sourcing projects.|
|Supplier filtering||Based on revenue projections and market trends, the sourcing application begins to collect information and filter results, which saves time on information gathering and prevents buyers from wasting time and resources on suppliers that are obviously incompatible with their needs.|
|Electronic request for x (eRFX)||Sourcing managers can submit requests for proposals, tenders, quotes and other forms of information in order to continue eliminating those suppliers that do not meet the organization’s needs or financial goals. Once the data starts coming in, the system manages that information and makes it easy to compare quotes and supplier capabilities.|
|Auction initiation||Once a list of viable suppliers has been created, a reverse auction can force suppliers to compete with each other on price. The sourcing software handles incoming bids and communicates standing bids to competitors. Or it can hand this task over to purchasing software, which will carry out the PO process to its conclusion.|
Strategic sourcing software focuses in different areas: Some focus on spend analysis, while others focus on request management. Many will offer additional features and functionality that are typically associated with procurement or supply chain planning solutions. So when selecting your vendor, assess the use case for your software and ensure that you look for something that meets those needs.
Specific questions to consider include:
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