How Effective is Your Sourcing Process?
CFOs and CPOs want to improve the effectiveness of their sourcing process but they may be wary of new tools that promise to solve every problem.
Recently I have noticed that procurement professionals are more willing to utilize multiple systems. This allows them to avoid the weaknesses that typically come with systems designed to handle every facet of procurement.
The current thinking is to use best of breed for each phase. In most cases these systems can talk to each other however, in many situations it is easier to perform a few manual steps to link to the next system.
I believe that it makes the most sense to tackle the biggest weakness in your procurement process and solve that first. A better process will save you time which is the one resource we all want.
I am confident that if you and each member of your team thoughtfully answer these questions that opportunities for improvement will be obvious. The most pressing issues will also stand out.
- What are the biggest weaknesses in your current process?
- What issue would provide the biggest financial return if you solved it?
- How much time could you save if you were able to automate parts of your sourcing or contract management process?
- What parts of sourcing and vendor management would you like to operate more efficiently?
- Do you have a formal list of recommendations that have been presented to senior management?
- How many of those recommendations have been implemented?
- Do you know where procurement priorities rank versus other company initiatives?
- What would the ROI need to be to justify spending $50,000?
- How would you describe the process you use to manage key contracts and spend categories?
- Do you have a cloud-based system to manage RFPs and large purchases?
- Are controls in place to eliminate or minimize rogue spend?
- Do you have criteria in place to define when a formal RFP must be utilized?
- What percentage of total spend does your team have influence over?
- Does your current system provide multi-faceted analysis automatically?
- How many hours a week do you spend creating or updating Excel spreadsheets?
- What feedback have you received from suppliers on your process?
- What process are you using to manage and correct supplier issues?
- Have you noticed a decline in the number of suppliers willing to provide realistic bids?
- Are there common complaints from internal customers that you would love to solve?
I will be the first to admit that self-evaluation is no fun however it is a necessary first step.
When I meet with a current or perspective client I often use this list as a starting point to find opportunities for improvement.
Action Step: Every organization can get better. Finding and creating success is often a matter of taking the first step. If you are uncertain where to start, a procurement professional like myself can provide guidance and expertise to help your organization achieve the results you want. If you would like to explore this topic in greater detail, please contact me.
If you want to explore a purchasing or procurement topic in greater detail, I invite you to request 30-minute discovery conversation. In my experience the next step will be apparent at the end of the call. I never assume that my recommendations will be right for everyone, so don’t expect a sales pitch. You can reach me at 973-936-9672.
Organizations of all sizes are reducing costs and increasing efficiency, without changing the way they conduct business. If you would like to know how, simply give me a call or send me an email with your contact information and the best time to reach you.
You Won’t Drift to Success©
Think about it.
Until Next Time, I Wish You Great Success in Your Business and in Your Life