According to Aberdeen interviews, the reasons for the prominence of optimization in the use of sourcing are:
- Price inflation of key commodities such as energy, base metals, resins and other raw materials that suppliers procure. Optimization can help an enterprise understand a supplier’s economics, cost structures and analyze the increase in the amount of data from such details. Assisting suppliers with energy costs and other raw material costs is an example where there is more information and optimization can analyze this data.
- After repeated e-auction and eRFQ events, supplier prices have been reduced to where suppliers’ margins and profitability can be damaged. Optimization can take a deeper look at additional information such as delivery options, quality and other attributes.
Having a flexible tool that allows for highly customizable combinations is critical for this type of analysis. More companies that have already embraced basic e-Sourcing technology are going to make the transition to getting deeper into the analytics of sourcing award allocation.