Yes, that’s right. (Strategic) Sourcing? Yes! Sourcing Tool? Maybe!
As a regular reader you’re probably confused as this blog has been advocating the acquisition and implementation of strategic sourcing solutions since day one, tirelessly explaining the benefits they can bring to one and all if they are appropriately selected, implemented, and utilized.
The reality is that a system that doesn’t support your needs and organizational processes, that is cumbersome to use and costs more in organizational inefficiency than it returns in savings or value identification, or that just sits on the shelf because your employees refuse to use it en-masse has no value. It has to be the right system for you. This system may be a low-end system, even though, as pointed out by The Prophet over on Spend Matters in his three-part series on Lower End Sourcing (Part I, Part II, and Part III),
these tools often lack more advanced capabilities, including tighter integration into third-party tools; supplier collaboration processes and overall project management; category management and comprehensive knowledge repositories; advanced workflow support and automation; access restrictions and audits beyond the basics; and advanced data collection and bid analysis
because, if an organization is just (gasp!) beginning its sourcing journey, is at the low end of the mid-tier and has relatively simple buys, or is understaffed and just needs to get the job done and get some quick hits to get more budget and support for a bigger and better system, it might be the right tool for the job. Or, if the organization is a large multi-national with complex category buys with a significant amount of its products coming from Asia, it could be the worst tool for the job, unable to support the detailed bids required, the Mandarin language for the English-challenged Chinese suppliers, or capture the information necessary for compliance and regulatory support.
An organization needs the right tool for the job — and it’s not always as simple as organizational size. One might think that Fortune 500 / Global 2000 always needs the most complex sourcing solution, high-end mid-tier needs a mid-market leader, and emerging mid-market needs a low-end solution, but that’s not always the case. It depends on what the organization is sourcing, how it is sourcing, and the gaps in current organizational systems and processes. There are situations where a low-end sourcing system is perfect for a Fortune 500. Take a bank, for instance. Most of what it sources are services. As a result, it probably has a great services and talent management solution, but needs something better for office supplies, servers, and other consumables. These are not the most complex categories or the most complex buys anymore. And a mid-market player designing custom manufactured electronic components, which uses outsourced manufacturing in China and Brazil, probably needs a significantly more advanced sourcing solution than other companies with a similar valuation.
So while the doctor fully supports sourcing systems and believes every company should have one, like a shoe, the system has to fit (like a glove). Otherwise, just like a dancer with two left feet, the organization will constantly be tripping over itself and see no benefit at all.