An expert in strategic sourcing and procurement technology has urged procurement leaders to put three crucial strategies in place to maximise their cost reduction and value-adding capabilities.
Writing for the Procurement Leadersblog, Jake Wojcik says that strategic sourcing must involve more than holding a sourcing event and finding the lowest-cost vendor. This approach ignores the need to seek the highest-value vendor and can negatively impact business functions across the organisation, not just procurement.
Wojcik explains that procurement teams can deliver 70% of their value to the business with the following three data-driven strategies:
Develop a world-class data strategy
Procurement teams who begin with excellent spend analytics and spend data optimisation have been shown to exemplify best practice. Cost reduction becomes guesswork if buyers can’t see where savings can be made. Clear visibility into the organisation’s non-payroll spend has become a necessity. The spend visibility provided by spend analytics technology: “is an absolute critical path element” for Wojcik. He adds: “… no procurement organisation can make a claim to world-class status or even average performance if it lacks this entry-level capability.”
Use data-driven category management
Procurement professionals can benefit from data-driven insights to influence the function of specific categories and make the best opportunity assessments for strategic sourcing. The data helps procurement pros track and measure how savings will be made once the sourcing process happens, enabling them to not only source a specific category but to measure their impact on their activity.
Develop informed strategic sourcing
To define a company’s annual savings goal, procurement professionals need enough visibility into reliable spend data that has been organised into sourcing categories properly reflecting the structure of the supply base. A strategic, fact-and logic-driven process on business objectives allows purchasers to understand what the company needs, and to bid on categories in a more holistic and informed way.