The Future of Sourcing?

When Michael mentioned to me his idea of summarizing thoughts from a group of bloggers (in the form of a virtual round table discussion), I instantly thought about trying to actually think this through and come up with something interesting – all while trying to close on a house and move my family! Having brought together a great group of thought leaders already, I buckled to the peer pressure and decided to throw in some ideas of my own. One thing that can be said easily is that the Sourcing technology industry is moving so quickly that no one will end up having a correct answer. The closest we can come, is to merge together a group of ideas to paint a very fuzzy picture, so..full steam ahead!

As I looked into the other people that were participating – Dave from Oracle with deep market knowledge at the largest companies, Tim with access to every CPO in the world, Jason as the new world leader of online media in sourcing, and Doug who actually is working in sourcing, it seemed to me that just creating my own forecast of the future would be somewhat redundant, and maybe even less credible. My contrarian view is more from what I have seen already – since 2000.

In 2002, the craze was about reverse auctions. All the buying teams wanted to know how to run them and what could be saved on what items/services. In 2004, the new item du jour became e-RFx and companies wanted to build in sourcing automation and process to the strategic bidding cycle. Now in 2006, sourcing optimization has become hot territory as companies realize that complex modeling can be done by the common man. Michael even had a very good deep dive on this topic here on E-Sourcing Forum last weekend. Obviously, Iasta believes the future of sourcing lies in the optimization functionality, but this is only half the story and is only looking at how technology will change and adapt.

My belief of the future is also forged by process improvement and enhanced corporate understanding of how to use technology. There are fantastic platforms available now that did not exist 10 years ago. These have helped companies save billions of dollars just by sheer brute force of better tools that buyers did not previously have. However, could you review your spend with an Access database instead of a fancy spend analysis tool? Could you negotiate pricing with Excel and Word over email? Yes, of course you could, and many companies that have Supply Management technology still have people that do this. This is why I believe the immediate future lies in companies understanding how to pull all these tools together to be used effectively. Again, my opinions lie not from interviewing leaders at individual companies, but from seeing how Supply Management gets used in the real world from over 100 clients. Some use it really well, some do not. All have room to learn and get better. I am definitely on the ground level with the Infantry, not in the Generals war room, so my thoughts are more refined to the usage today and tomorrow over what will be the convergence of many loosely tied factors.

Another factor to consider, especially from the technology side – its not done. Software is a living, breathing entity, that changes daily. Once a tool is brought into the process, you will have some functionality that will help immediately but there is a maturation process that vendors and customers alike are going through to find the best fit and features. This is a very fluid process and every release of an application will address more issues but they will never be complete. The software can help any organization with weak areas but this always should be supplemented with personnel improvements and new innovative ideas.

How do you bring it all together? This is the $64,000 question and there are many strategies that are needed which include having a strong vendor that can help build the momentum and execute the plan. Executive endorsement, buyer performance review based on technology adoption, savings goals and tool visibility, extensive and repetitive training, and deep understanding of the proper application of each tool are just the foundation. Previously, I have written about this topic here, and here, and I will continue to do so, as it is very important. In fact, it is such a valuable discussion point, that Iasta and yours truly, will be leading workshops on the topic.

In all honesty, this is a very difficult blog to write. I feel as though I could go in 10 different directions and all have some merit. To give this topic justice, it would need to be 50 page white paper for starters and then be bolted onto every month. Hmmm…

Still quiet here.sas

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