Daily Archives: August 25, 2006

The Sourcing Innovation Series: Part III

Yesterday was a quiet day. David blogged about beer, Jason blogged about Hype Cycles, Gartner, and Spend Management, The iPod: Contract Manufactured With Love (well, almost), and Measuring the Impact of War in Israel and Lebanon, and there was silence over at Vendor Management. The only activity was Eric Strovink’s comment to Dave’s post where he noted that we need to step back from the RFP “blunt instrument” a bit since simple but smart actions sometimes generate surprising results. More importantly, he asked Do we clearly understand the demand side of spend?. This is a very good question, and one I’d bet that we rarely really know the answer to. After all, if we did – we wouldn’t need “forecasting” tools, “demand measurement” tools would do just fine.

On a different note, I can tell you that not only are more leading bloggers crafting their predictions even as I type this but that you can look forward to at least one surprise guest contribution on the future of sourcing here at Sourcing Innovation in the next week. Note that my four-part (yes, 4) series on Optimization begins today on eSourcing Forum. As I mentioned earlier, it will explain why I agree with Tim that decision-optimization guided sourcing is about to enter into the sourcing mainstream in a big way.

Getting back to the future of sourcing, I meant what I said when I said that I believe that sourcing five years from now will not be the same as sourcing today. For starters, it will be a lot more strategic. After all, once the 800 pound gorillas incorporate basic procurement and sourcing functionality into their application suites and the open source start-ups provide you with free applications for the basic information gathering, negotiation, and contract tracking portions of your sourcing cycle, the only way a(n) (e-)Sourcing provider will survive is by taking sourcing to the next level and developing new applications that allow you to define, analyze, execute, and access a databank of multiple sophisticated sourcing strategies with ease. Whereas today RFXs are templated, in the sourcing world of tomorrow entire sourcing cycles will be templated with integrated optimization-based decision support analytical tools that will help you determine make-vs-buy, short-cycle vs long-cycle, internal vs shared innovation, etc. Total Value Management will be the norm, Lead Time Optimization will be automatically accounted for, and demand forecasts will be based on dynamically updating collaborative multi-channel analysis. Tactics will be automated … strategy will be everything. And I’m eagerly anticipating Jason’s response to this prediction!