These are exciting times for procurement professionals. But consistently, most procurement leaders feel they should be doing better. Unlike last year’s Ardent report on “The State of Strategic Sourcing,” respondents in 2015 see as obstacles technology systems and processes rather than staff or talent challenges. Moreover, they feel that they can drive improvements that propel procurement forward through effective use of collaboration and enabling technologies, something that best-in-class are doing better than their peers.
Survey respondents note that a strong partnership between the CPO and CFO is especially effective. Combined with visibility into just about every procurement process — from financial impacts, spend analysis and savings to enterprise view of spend under management, enterprise goals and objectives, and negotiated savings — collaboration with suppliers and internal stakeholders along with an integrated enterprise sourcing process and data visibility are at the forefront of the modern CPO’s strategy.
The Ardent report also delves into the CPO psyche, and how they perceive procurement benchmarks such as value drivers. What is considered “best-in-class” strategic sourcing? Across the board, organizations that focus on strategic process improvements such as process automation and supplier initiatives with an emphasis on technology adoption are recognized as leaders. The characterization of “best-in-class” specifically notes efficiency, agility and intelligence standardized and applied from sourcing to supplier management, and to risk and performance management, to achieve a holistic view of source-to-settle functions. No surprise, given the focus on insight, visibility, control and collaboration rolled up into one enterprise solution, that technology is seen as the enabling resource needed to facilitate future innovation and maintain competitiveness. Both internal and external collaboration and actionable data and analytics for better decision-making are some of the benefits attributed to modern strategic sourcing applications.
But interestingly, even with strategic sourcing suites offering complete solutions, most buyers of strategic sourcing solutions today are still only implementing parts of the wider suite, thus failing to optimize full functionality. We at Determine see this play out daily, as we onboard new clients who consider buying only pieces of a suite such as connecting the dots between supplier information management and contract management, or just using spend analysis with strategic sourcing. This strategy is sufficient, so long as the approach includes considerations for future needs.
Furthermore, based on the research, leading procurement organizations are maximizing their technology investments by adopting a combination of tools that improve supplier collaboration, identify new sourcing opportunities and can maximize current contracts — for a more holistic view of their strategic sourcing and supply management efforts.
Ultimately, technology that enables a supplier-centric approach to sourcing maximizes the value of strategic sourcing suites, supports improved compliance and delivers supplier metrics and business insights that are at the core to the demands of modern sourcing.
* If you’d like to read about Best-in-Class competencies for sourcing functions including CPO’s top challenges and drivers for success, you can download the full Ardent report here.