What Makes a Sourcing Suite?

Good question, and one both customers and vendors must answer in the days ahead. Last decade, it was pretty simple. You could claim a sourcing suite if you had decent e-Negotiation support with some document management and reporting. And if, instead of document management, you had contract management and if, instead of reporting you had real spend analysis, then you were best of breed. And if, on top of all of this, you had some basic project management or category guidance, you were awesome.

But that was then, this is now. These days, if you don’t have basic S2C (Analysis, e-Negotiation, Contract Management) with decent Supplier Information Management, you’re not even a contender. Plus, given that many providers are offering some project / workflow management, expert driven category guidance, bill of materials support for direct sourcing, contract analytics (not the same as contract management), deep SRM (Supplier Relationship Management, Performance Management, Compliance Management, Risk Management, Optimization and other unique offerings that they expect to gain them market-share.

So what do you need? Hard to say because the real answer is whatever you need to successfully conduct and monitor a sourcing event that doesn’t belong in the complementary P2P suite. That varies based on the category and the industry you’re in, but there is some commonality. Specifically, while still not a mainstay of sourcing suites, every suite needs project/workflow management, every suite needs some performance tracking and management (as that should influence not only current, but future, events), a minimum of SPM (supplier performance management) and not SIM, some compliance requirement and documentation management, and better than average analytics. And any organization that does a lot of direct sourcing needs Bill of Materials Management, and while most organizations don’t know it, you’ll always find a lower-cost allocation with an optimization-backed sourcing solution. (And going back to Wednesday’s post, this isn’t savings, this is avoidance of unnecessary costs.)

In other words, you need a lot. But, fortunately, you don’t need best of breed for most of this. The only solutions that continually provide year-over-year value of 10% or more (through avoidance of unnecessary costs) are advanced analytics solutions and true optimization solutions. So you need best of breed here.

But not for most of the other components, although certain components should be better than average. The RFX in particular. It should not only be ridiculously easy to create and modify RFXs (which are typically the beginning of every sourcing event) but also to bulk upload attachments (as this can kill days in large projects when you have ten bill of materials with a dozen to a hundred items each and each component needs its own spec document), define a team for collaborative and distributed creation and scoring, and one-click integration into the analytics and optimization modules for detailed analysis.

Another component that needs to be better than average is the Supplier Portal — you need to make it as easy as possible for suppliers to provide information, response to events, create collaborative corrective action plans, offer innovation ideas, and so on. You want your suppliers to work with you and find it at least a reasonable, if not an enjoyable, experience. If the portal, and integration options, are sub-par and painful to use, and leave a bad taste in their mouth, this will eventually sour the relationship.

In other words, while the exact definition of a Sourcing Suite can be a bit nebulous, the requirements it has to fulfill, especially for your organization, are not. And a key requirement is usability and a good user experience for buyers and suppliers alike. Keep this in mind when selecting your new sourcing solution.

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