This is a repost/follow up of the classic post SI ran two years ago on Sourcing? Yes! Sourcing Tool? Maybe ….
If you missed this post the first time around, 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.
But the best tool for the job is a system that contains all the capabilities the organization will need as it progresses through its sourcing journey, and, more importantly, can be adapted to new and improved processes as the organization matures. Fortunately, some of the more innovative mid-market providers, and even some of the more aggressive enterprise solution providers have realized this and are now offering Sourcing and Source-to-Pay solutions with adaptable, extensible workflows that also support out-of-the-box integration with existing ERP, AP, and even P2P solutions.
This way an organization, just beginning its sourcing journey, can implement the foundations, mirror existing processes (even if not optimal), and have the team up and running as fast as possible. As the team gets comfortable with the tools, more and deeper, functionality can be enabled, processes enhanced, and analysis intensified.
And the best platforms are enabling enhanced functionality workflow templates where senior buyers can customize workflows, RFXs, cost, and even optimization models for simpler categories often sourced by junior buyers so that junior buyers can apply best practices and advanced learnings and the organization can make the right buy every time without wasting the limited time of senior buyers needed for the large, multi-million dollar buys.
Not only does this allow sourcing platforms to be properly implemented, and proper processes followed, but it allows an organization to not only get more Spend Under Management, the ultimate key to sourcing success. In fact, it can allow an organization to start tackling tail spend, the bottom 20% of spend which often contains up to 30% overspend, years ahead of its peers.
This is in contrast to organization that selects the wrong tool for a job. Such as a large multi-national organization with complex category buys with a significant amount of products coming from Asia that selects a rigid, English only, platform designed for buying finished goods through third party distributors.
So, while the doctor still fully supports sourcing systems and believes every company should have one, like a work shoe, the system has to fit (like a glove). Otherwise, just like a dancer with two left feet, the organization will be constantly tripping over itself and see no benefit at all!