Daily Archives: September 27, 2017

Sourcing the Day After Tomorrow Part V

In Part I we recapped Sourcing today, in Part II we recapped the review step, and what it entails today. Including a few of the sub-steps that were typically done sequentially in a long, manual, and drawn out process. In Part III we dove into these steps and explained while some were critical for a sourcing professional to undertake, others, while necessary, were a complete waste of time as the majority of the tasks could be automated. Then we asked if it was just the review step where this was the case. In our last post, Part IV, we discussed the second major step, Needs Assessment. So today it’s time to discuss if this step should still be entirely manual as well.

In our deep dive into the needs assessment in our last post, we discussed the following key sub-steps:

  • Detailed Use Case Review
  • Exploration of Alternative Options
  • Production Requirements
  • Support & Service Requirements

And unlike the review step, heavy sourceror involvement is required in each and every step of this process.

Sourcing professionals need to

  • clearly understand how the product is to be used to understand key product requirements
  • evaluate the potential alternative options identified in the review step against the use cases and key end user values
  • evaluate the production options to understand not just throughput and quality but efficiency and cost
  • know what support and service requirements are needed, what’s involved, and what needs to be looked for

But how much of this is truly strategic? While each of these steps is clearly strategic on the surface, many of the tasks are not as strategic as one may think. Let’s start with detailed use case review.

There isn’t much of a detailed use case review to be had if the product is for internal consumption use (like office supplies) or traditional CPG products for consumer sale (as these use cases are well defined). Nor is there much to review if the event is for a production line widget that is maintaining the same production line. If the use case hasn’t changed, there is little to review. As long as the prior review is on file and the key value factors known, and captured, in the sourcing even template, all is done. And your supply management platforms should capture this information and maintain it, and its application, from even to event. Only custom built products or products where changes are needed should need in-depth reviews on a regular basis. And software applications can query stakeholders against previous requirements automatically to get this done.

Now, the depth of review required for alternative options will be dependent on the use case step. If nothing has changed, only new options that have come along will need to be evaluated, and only if they address key value factors or changed requirements. The reality is that properly captured alternative options with key feature lists, descriptive use cases, reliability reports, and models can be automatically evaluated for likelihood using modern semantic technology and AI algorithms and eliminated if they are not likely candidates, even though most aren’t. And this step should not take near as much time as one should think, especially if it seems there are a lot of alternative options.

Moving onto production options, it might seem that this is one step that has to be manually trudged through due to the complexity and that will never change, but the reality is this is not the case. For example, companies like Apriori allow real world production processes to be modeled in extremely detailed virtual production models that can be used to analyze efficiency, cost, reliability, and a host of other factors. If the production environments are modelled, they can be analyzed and compared to the product requirements and the suppliers easily evaluated on this capability with minimal buyer involvement.

Finally, good Supply Management platforms allow key support and service requirements to be captured during the use case creation and inferred from survey responses. Plus, previous requirements can be maintained and algorithms applied to determine whether or not they need to be re-considered by the buyer. And modern service procurement platforms come with detailed templates and check lists that should be considered during requirements creation. Buyers need to be involved and strategically assess the situation, the work to do so is nowhere near as onerous, and error prone, with modern solutions as it used to be.

In other words, we again see that even strategic buyers waste much of their time on tactical processes and non-strategic considerations and Sourcing has to change. But just how much does it need to change? Let’s consider the next step of the Sourcing process in our next post.