What are the most effective methods for data-driven sourcing decisions?

1 Define your sourcing objectives

Before you start collecting and analyzing data, you need to have a clear idea of what you want to achieve with your sourcing strategy. Do you want to lower your total cost of ownership, increase your supplier diversity, or optimize your delivery times? By defining your sourcing objectives, you can align your data collection and analysis with your business goals and priorities.

2 Identify your data sources

The next step is to identify where you can get the relevant data for your sourcing decisions. Depending on your objectives, you may need to gather data from different sources, such as internal systems, external databases, market research, supplier surveys, or customer feedback. You should also consider the quality, reliability, and accessibility of your data sources, and ensure that they are updated and consistent.

3 Choose your data analysis methods

Once you have your data sources, you need to decide how you will analyze them to generate insights and recommendations. There are various data analysis methods that you can use for data-driven sourcing decisions, such as spend analysis which can help identify savings, consolidation or negotiation opportunities. Additionally, supplier performance analysis can measure how well your suppliers meet expectations and requirements, while supplier risk analysis assesses the potential impact of various risks on your supply chain. Finally, supplier opportunity analysis can uncover new or emerging suppliers that can offer better value, quality or innovation.

4 Use data visualization tools

Data visualization tools are essential for presenting and communicating your data analysis results in a clear and engaging way. Data visualization tools can help you create charts, graphs, dashboards, or reports that highlight the key findings, trends, and patterns in your data. Data visualization tools can also help you compare different scenarios, perform what-if analysis, and test hypotheses.

5 Implement your data-driven sourcing decisions

The final step is to implement your data-driven sourcing decisions and monitor their outcomes. You should document your decision-making process, rationale, and assumptions, and communicate them to your stakeholders and suppliers. You should also track and measure the impact of your data-driven sourcing decisions on your sourcing objectives and key performance indicators. You should also review and refine your data collection and analysis methods regularly, and adapt to changing market conditions and business needs.

Data-driven sourcing decisions can help you optimize your supplier sourcing process and achieve better results. By following these methods, you can leverage data to find the best suppliers, reduce costs, and improve performance.

6 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?