The Role of Optimization in Strategic Sourcing – The Future of Optimization

This series discusses the recent report from CAPS Research on the role of optimization in strategic sourcing. The primary goal is to highlight, clarify, and, in some cases, correct parts of the report that are important, confusing, or incorrect to insure that you have the best introduction to strategic sourcing decision optimization that one can have.

What will the future hold? The authors predict development in the following two directions:

  1. more self-serve applications that require no third-party involvement
  2. more powerful services that handle even larger, more complex problems

In other words, the same-old same-old for the foreseeable future. I’m sad to say I have to agree. Until strategic sourcing decision optimization catches on, most of the current providers are not going to make significant investments exploring new vistas for a solution that the majority of their customers aren’t even coming close to stressing out today. You see, current applications are just “scratching the surface” of potential uses. Optimization is very powerful and could ultimately be used to optimize the entire supply chain.

However, the applications will continue to get more user-friendly and easier on the self-service front as providers get exposed to even wider ranges of models and uses and refine their interfaces to support even more possibilities (while simplifying the definition of the average model). So this is something to look forward to.

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