There’s no single right answer or easy answer here. It’s very situational.
Some consultants will always tell you to start with Procurement because:
- you get manpower and transactional savings immediately
- you will get the majority of your spend properly categorized in ONE system (which will enable better spend analysis and opportunity selection later)
- you will stop overpaying and duplicate paying invoices with 3-way matching and reduce recovery requirements
- you will reduce cycle times and be able to take advantage of early payment discounts
- and so on …
Some consultants will always tell you to start with Sourcing because:
- you can invite and compare more supplier bids with modern RFI tools
- auctions are a great way to realize a quick category price reduction
- timeline reductions allow you to source more spend
- portal-backed SIM makes it easy to keep track of suppliers and contacts with up to date information
- etc.
But this doesn’t take the chicken and egg situation into account.
- you can’t identify significant savings without a modern optimization-backed platform-backed sourcing solution that allow you to identify new opportunities, which means you need to start with a Sourcing platform if you need savings fast
- but you can’t identify the best categories without good data, which is captured in a good e-Procurement/P2P system, which means you need e-Procurement to capture the data you need to identify the right opportunities (using spend analysis in the sourcing platform)
Or the fact that the biggest savings opportunity for your particular organization might be a best-of-breed niche SRM or CLM solution due to your biggest savings opportunities lying in supplier development or compliance.
So where do you start? Stay tuned for Part II.