The Most Under-Utilized eSourcing Tool in Procurement

Ongoing supply chain disruptions call for rapid, agile solutions. As an eSourcing software solution that has consistently proven to yield some of the biggest ROI paybacks in the procurement arena, every enterprise and mid-sized business with a supply chain should consider using?sourcing optimization technology?to help mitigate risks while helping to discover new opportunities for cost-savings.

On top of that, as comfortable as many sourcing professionals may feel in the old familiarity of spreadsheets, turning back to desktop-based sourcing practices where you’re managing emails (a familiar workaround) doesn’t come close to aligning with today’s Chief Procurement Officer-level prioritization of greater digitalization, modernization, and automation.

When something starts happening with more frequency – as we’ve seen with sourcing and spot buying – scalability and speed are key.? And that’s where sourcing optimization comes in.

A Brief Background to Optimization: eSourcing Tools

Optimization-backed eSourcing solutions first came onto the landscape in the early 2000s, delivered either through software or specialized consulting services backed by technology. It was the next natural advancement following the widespread adoption of eRFP and e-auction tools, which in the 1990s introduced a way to digitize and centralize silo-based, often manually executed buyer-supplier negotiations.?

For many companies, a basic eRFP or e-auction product is still their first port of call, utilized as a means to?drive competitive bidding focused on the simpler spends where “lowest price” is the dominant or sole decision criteria among qualified suppliers.?

However,?an increasing percentage of sourcing decisions now go beyond just pricing analysis as a means to award the winning bid i.e. for the cheapest, that’s where the most capable (yet vastly underutilized) eSourcing tool, sourcing optimization, should come into play.

More advanced than straightforward eRFPs or e-auctions, sourcing optimization is designed to mathematically combine multiple criteria – price and non-price – to arrive at an optimal award decision given various constraints. Yet many procurement teams still view eSourcing software as limited to niche or large-scale sourcing cases and only to be wrangled by staff members who possess specialized training and advanced skill sets.

Here are some ways to expand the reach of sourcing optimization and remove the obstacles that may be in the way:?

1 Find a Solution for the Majority:?Yes, adding or expanding sourcing optimization’s use means more team members will need to learn another eSourcing tool. Companies should evaluate solutions based on how easy it will be to adopt for the largest portion of their team, not just a few advanced users who are focused on the most highly complex use cases.

2 Determine the Training Journey:?A procurement team may design a phased approach for onboarding more team members to optimization or may implement a train-the-trainer model and/or a center-led advisory team.?The plan should include ongoing refresher or up-level training so skills improve vs. getting rusty. Optimization benefits grow with better feature usage. Your solution provider also should play a partnering role.

3 Encourage eSourcing Tool Adoption Through Process Changes:?There should be a clearly articulated guide for determining when to turn to optimization vs. a basic e-auction. Criteria matrixes can help, and again, Keelvar has best practice guides for our customers to start crafting their own guidance. Also, sourcing transformation can be motivated with incentives and even through sharing of “win” stories internally.

4 Promote the Benefits of Greater Transparency:?Getting more sourcing digitized makes everything easier to track and for reporting to be shared. This can also help identify areas of adoption lag. Setting realistic goals is also key, in terms of how much more spend should shift to eSourcing and optimization on an annual basis, along with accountability against those goals.

The bottom line is if you’re yet not using optimization-backed?sourcing technology,?it’s time to reevaluate that stance. Optimization delivers powerful benefits for both mid-sized and enterprise organizations alike, particularly where spend categories are more directly tied to business success.?

And with the global supply chain chaos showing little sign of abating any time yet, it's high time to broaden the reach of this powerful eSourcing tool.