Modernize Procurement with Sourcing Optimization

September 03, 2018

Contributor: Sarah Hippold

Application leaders can drive productivity and increase savings across a variety of spend categories by adopting these solutions.

Sourcing optimization solutions have been on the market for more than a decade — yet until now they have been niche, primarily used by sophisticated companies with high spend to minimize costs. However, new features and enhancements have recently raised the appeal of these tools for organizations of all industries and sizes that are looking to optimize their e-sourcing practices.

“ Quick wins are an effective way to create acceptance of new technologies and procedures”

“Companies today use sourcing optimization solutions to effectively source direct materials, logistics and transportation as well as indirect goods and services. These tools have become very versatile,” explains Kaitlynn Sommers, principal research analyst at Gartner. “However, we still see a lack of understanding of functionality and more ways to maximize value from the tools. This hinders the strategic use of such tools to increase savings.”

Application leaders who want to capitalize on their sourcing optimization solution should take the following steps to ensure adoption as well as increase savings and efficiency.

Provide internal support

Sourcing optimization tools have made huge progress with regards to user experience, but certain skills remain crucial to maximize the benefits from these solutions. If application leaders find that their staff lack the necessary skills, they should assemble and train a core team of select individuals to become subject matter experts (SMEs).

“The members of the SME team should be trained by the sourcing optimization vendor first and in more detail than the remaining user base, as they will be responsible for developing internal best practices and supporting the general user base,” Sommers explains. “Their experience will also allow them to consult on more complex projects.”

Develop and maintain best practices

After implementing a sourcing optimization solution, the SME group should develop a set of processes and best practices that can be layered on top of the organization’s e-sourcing practices.

“The first project could be step-by-step guidance on how to successfully create and manage a sourcing event,” suggests Sommers. “Reference documents should be stored in knowledge management or learning management systems.”

Focus on quick wins

Quick wins are an effective way to create acceptance of new technologies and procedures. For example, projects that have so far only been optimized manually or sourced through traditional e-sourcing applications can often generate a high ROI and convince sceptics of the advantages of sourcing optimization solutions.

“When internal stakeholders realize the potential time and cost savings created by the sourcing optimization solution, resistance will melt. It is important that application leaders achieve significant savings on the first few projects to increase the C-suite buy-in and further support a case for using advanced sourcing solutions,” Sommers concludes.

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