eSourcing – The Next Phase

Iasta recently sponsored an Aberdeen benchmark report that covers mainly how eSourcing is being used by some of the best companies in the world, how they are extracting the most value out of these respective tools and what they are doing to go beyond the simple project focus into more advanced application of eSourcing functionality. These metrics and discoveries were the primary reason for our involvement and I felt this was one of the most interesting research studies done in the last few years. At an executive summary level:

Key Business Value Findings

Enterprises that employ advanced sourcing strategies are positively impacting product development cycles and building stronger supplier relationships by making better, more informed decisions. They are also driving innovation and to be certain, they are saving more money than their competitors.

On average, the enterprises participating in this benchmark report:

• Identify savings of 11.9% per sourcing event
• Realize savings of 9.4% per sourcing event (savings that are actually implemented and “realized”)
• Utilize a formal strategic sourcing process on 43% of their total spend
• Utilize e-sourcing across 20% of their total spend
• Employ advanced sourcing strategies on 15 to 40% of their sourcing initiatives

Considering the benefits seen by the average e-sourcing program, it is surprising that a full 36% of this benchmark’s respondents (and 20% of all large enterprises) fail to utilize any level of e-sourcing.

Implications & Analysis

Best in Class enterprises use formal strategic sourcing and e-sourcing processes to drive greater e-sourcing throughput, achieve higher than average savings, and provide greater value to the enterprise. They are 32% more likely to employ advanced sourcing strategies and proclaim a 54% edge in their proficiency. Their superior performance is perhaps best exemplified by having realized savings results that are 39% better than their competitors.

These are very powerful findings and some of the data mined and case studies used are directly from Iasta clients that also participated in the study. This week, I will continue to examine the results and report different aspects here.

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