KEY TRENDS OF STRATEGIC SOURCING

 

Strategic sourcing has been growing in importance in the world of procurement.  Traditional sourcing strategy of picking the supplier who offers the lowest cost worked for centuries but doesn’t cut it in a modern, globalized business climate. 

Strategic sourcing has proven to be far more effective. In 2020, we saw the value of this approach as a pandemic pushed supply chains to the breaking point. Consumer buying behavior was upended, while many companies were forced to pivot and produce high-demand products like PPE.

Adding to the challenges, there were travel and shipping restrictions, and many employees rapidly shifted to working from home.

Have a Digital Strategy in Place

Many organizations found themselves caught off guard by the events of 2020. Those that already had a digital strategy fared better. With the groundwork already in place, they may have had to move faster than planned, but there was less sense of panic and they were able to pivot more efficiently 

Solutions were deployed that made sense and followed the established framework. Companies that lacked a digital strategy at the start of the year often found themselves flailing to adopt technology in response to rapidly changing conditions. When the situation is normalized, they will likely have to walk back some of those solutions because they don’t integrate, lack needed features, or are the wrong tool for the job. 

 

Enhance Sustainability

With clearly defined business and vendor requirements, your vendor selection team would be able to easily find suitable vendors, who can deliver the service /product that you wish to outsource. Ask your team to compile a list of possible vendors, but remember that not all vendors would meet your requirements. 

After conducting interviews and researching on suitable vendors’ backgrounds, you will have to select a few vendors from whom you would like more information. Your vendor selection team can then write a Request for Information (RFI) and send it to the selected vendors. The next step would be to evaluate the responses from the vendors and create a shortlist of vendors.

Sourcing & Procurement as a Service (ScaaS)

While many organisations manage their supply chain activities in-house, executives in the industry predict that more and more businesses will adopt supply chain as a service (ScaaS) models, outsourcing the likes of manufacturing, logistics, and inventory management.

It is expected that as supply chain management teams become smaller, companies will have a team of skilled individuals focused on strategic decisions to improve the supply chain.

Artificial Intelligence

AI will not remain just a procurement trend in 2019 with more and more organizations going to adopt in their processes. Procurement teams will design and deliver intelligent bots to complete most run-of-the-mill procurement tasks with minimal human intervention. From managing large-volume of orders to running repetitive sourcing events, from negotiating with suppliers for low-value items to updating inventory lists, AI will undertake all these activities, thus putting mundane tasks on auto-pilot mode. Products like Zycus’ Merlin A.I. Studio can quickly scale up the procurement process, using multiple pre-packaged procurement bots as well as an easy-to-create bot store.

Moving to effective management

Procurement leaders have time and again agreed change management being the biggest roadblocks in achieving the outlined procurement goals. With the advent of digital technologies, the transactional work in a procurement function is becoming automated. As a result, the extra time available due to automation can be deployed by resources in more strategic activities that a business needs. But the transition to change management is not easy, as it brings a sense of insecurity about the end state and hence resistance to undertake new initiatives. In 2019, more organizations will focus on a smooth change management plan through increased focus on regular communication with the employees; engage them through the process and by providing adequate training and support.

Integration with Circular Supply Chains

Soon to replace the linear supply chain, organisations who adopt the circular supply chain approach stand to gain from reduced costs in the long term, reduced waste and reduced impact on the environment.

A key driver in the adoption of this approach is stricter regulations when it comes to recycling and waste disposal, as well as potential incentives for sustainable efforts made.

There’s a lot to digest in this list of strategic sourcing trends. Fortunately, the solution to acting on them all is simple: Bid Ops. Bid Ops offers procurement teams the unique ability to solicit and evaluate quotes, identify bottlenecks, and deliver impressive business value. By allowing your team to discover and scale your best sourcing strategies quickly, Bid Ops enables you to deliver more than savings, making an impact on your project pipeline that wins recognition.

Within a few minutes, you’ll see Bid Ops was not just built by procurement professionals, but for procurement professionals. Bid Ops, a strategic sourcing software powered by AI, was designed from the ground up to leverage the most advanced technology. Sourcing trends change, but the need for effective process and workflow will never go away. In actuality, as the world continues to evolve and technology becomes more and more prevalent, we will expect workplaces to become more efficient. Don’t find your sourcing team on last year’s trend list, request a demo today to get started with no upfront costs.

With all of the insights that sourcing and procurement bring to the table, technology will become a stronger strategic advisor to the business units. The more we automate, companies will speed their supply execution speed and gain more business.

Regardless, sourcing & procurement lines will resume slowly but surely. As they do, sourcing & procurement leaders will need to shift their spending and adopt new technologies to stay competitive.