3 steps to optimize strategic sourcing
- 01 Sep 2017
- Best Practice & Strategies
Our recent research revealed that a whopping 83% of growing organizations don’t challenge their suppliers on cost or performance, leading to difficulties in managing and ensuring profitability. Inconsistent performance evaluation, decentralized handling of supplier data and contracts renewing without review are all common issues to purchasing teams.
So here’s our 3 fundamentals to get your strategic sourcing into shape:
1. Use eTenders and eAuctions
Electronic tendering enables buyers to automate and standardize how tenders are created, distributed, collected and stored, increasing efficiency compared to manual tender management which can take up to 85% more time. With consistent data formats and a more collaborative approach to tender management with eTenders you’ll see much higher levels of document and process quality. And the automation of the entire process means you can run more tenders, creating more cost savings that can be reported back to the wider business.
With the collaboration tools your stakeholders have immediate access to all the supplier data they need, and no one will ever miss a completion deadline with the automatic alerts and reminders, helping your team and your suppliers to stay on top of tender management activities. Electronic auctions drive savings that simply cannot be achieved by any other means of supplier negotiation.
eAuctions can help you achieve significant collective price reductions across all categories against bids submitted during your tender processes. Using the competitive behavior driven by real-time online negotiations to your advantage, you can push for the best possible value from your supply chain. The comprehensive functionality of eAuctions allows you to quickly and easily set up and run the event, including inviting suppliers. And, once the event is over you can easily report on the results and identify the achieved savings.
2. Contract Management
Without having the right tool to effectively manage and monitor contracts, supplier agreements can roll unchallenged from year to year, locking you into increasingly poor pricing and service terms. Contract management software can help you manage any number of contracts and with a secure and centralized repository where only authorized stakeholders will be able to access and edit contracts.
Contract Management software gives you the ability to build contracts by integrating the details of preferred suppliers from eTender or eAuction events with the addition of custom fields to capture contract-specific data. This means that you will no longer have to spend time searching for all required information as it will be automatically populated for you.
Additionally, configurable automated alerts and reminders give your stakeholders the ability to set up renewal reminders and never allow any contract to rollover without your knowledge. This software can give you more control and reduce risk of being stuck in an unfavorable contract for longer than necessary. The comprehensive reporting and powerful search tool lets you search for all information you need, whether it is specific supplier information or how many contract renewals are coming up in the next 3 months.
Another thing to remember is that a Contract Management solution will allow you to assign different security levels to different stakeholders restricting what they can see or do, which increases control and decreases risks of sensitive data being compromised.
3. Track spend and savings
Even when many procurement teams have a wealth of tools and technologies at their disposal to help secure savings, when it comes to measuring and reporting on those savings against forecasts and targets, many still rely on spreadsheets. If that’s the case with you then you’ll be happy to know that there are better ways to showcase your savings progress in an effective and efficient way.
A Savings Tracker solution can enable you to quickly and easily build up saving forecasts, create tracking documents based on completed sourcing events and deliver intuitive reports that clearly demonstrate your procurement deliverables and value.
Medius Spend Management offers a variety of modules and features that can help your organization with its strategic sourcing. If there’s anything covered in this blog that you’d like to discuss just get in touch, we’d be delighted to help.