How to Optimize Your Sourcing in 5 Steps
Optimizing your sourcing has many benefits, including time and cost savings. Sourcing optimization involves finding the most cost-effective group of suppliers for your needs. Yet, true optimization goes a step beyond. Besides cost-effectiveness, you want to keep time restrictions, quality, and resources in mind. The best eSourcing platform is intuitive, easy to use, and is an integral part of sourcing optimization and strategic supplier management. Read on to learn more about sourcing optimization and how to achieve it in five simple steps.
1. Get the Best eSourcing Platform
The best eSourcing tools and platforms will greatly enhance your award optimization. Your eSourcing platform should have the features you need to make better sourcing decisions.
Features that your eSourcing platform should include:
- Real-time, live updates
- Award Scenario modeling
- Holistic analyses
- Spend analysis tools
- eRFx and eAuction capabilities
Platforms without these must-have features will not be as intuitive. For example, some businesses still use spreadsheets, which are cumbersome and not cost-effective. So, one of the most important things to consider when searching for an eSourcing platform is its ease of use. This gets you, your team, and your strategic vendors all on the same page.
2. Perform a Cost Spend Analysis
A cost spend analysis reviews your largest spend categories, and the suppliers within those categories. In the supply chain, solid cost analysis will inform you on which areas are performing well, and those that need improvement. Spend analysis capabilities are an integral part of any eSourcing platform. A cost spend analysis gives you valuable insight to make more informed sourcing decisions (i.e., comparing suppliers).
3. Run a Supplier Market Share and Spend Share Analysis
These eSourcing platform features will give you a detailed view of your suppliers, including their revenue and current market position. This is especially useful in an overcrowded supplier pool. Spend share gives you a view of your top-tier suppliers and your spend with them. For example, if a supplier demands a higher price, you have detailed insight into the validity of the demand. This will help you separate your most beneficial suppliers from the ones you no longer need, assisting with your strategic sourcing KPIs.
4. Use Category Risk Analysis
Another ‘must have’ feature is the ability to run a category risk analysis. This is imperative for your sourcing optimization and flexRFP eSourcing. One of the most common ways to perform this is to use a Kraljic portfolio matrix. This matrix takes a deep look into every category and offers you its potential risk level. This type of risk analysis is especially useful in industries such as crude oil. It also aids in the daily monitoring of prices.
5. Have Detailed Vendor Qualification
You may have too many suppliers vying for your business, which can be overwhelming. Remember, it’s not always the lowest price that’s important in sourcing—many other factors, such as quality, come into play. You must analyze beyond the lowest bid. As mentioned before, always perform a risk management analysis. With the right eSourcing platform, you can ensure your data is organized, centralized, and categorized before performing analyses to make a more informed decision.
Interested in how the right eSourcing platform can streamline your processes? Contact a Simfoni representative today to learn more or to request a demo.