The coronavirus pandemic has revealed major weaknesses in the retail supply chains of numerous organizations.
The worldwide supply chain disruption and shock exposed vulnerabilities that made many CPOs question the resilience of their supply chains.
As enterprises now battle to resume operations moving out of business continuity mode, intelligent sourcing has come up repeatedly as a new best practice moving forward.
But what exactly is intelligent sourcing and how can retailers benefit from it in 2021 and beyond?
What is Intelligent Sourcing?
SupplyChainDive.com defines intelligent sourcing as:
“…the process by which trading partnerships and sales performance are continuously re-evaluated and improved for the greatest efficiency and the best price points for the retailer, supplier, and the customer.”
What does this mean?
Simply put, intelligent sourcing is the business of continuous supplier management evaluation and analysis of the work being done by the sales team – whether they are meeting their goals and how well their sales strategies are working.
The main goal of intelligent sourcing is to improve the bottom line by mitigating spend along the supply chain.
Intelligent Sourcing Best Practices
Because the retail supply chain has changed considerably since the advent of technology and now with the COVID-19 pandemic, intelligent sourcing has proved a key function for tackling the challenges facing procurement teams in today’s climate head-on.
Here are some of the best practices sourcing teams can employ regarding intelligent sourcing:
Best Practice #1 Establish an Intelligent Sourcing Strategy
Any procurement team looking to take advantage of intelligent sourcing needs to assemble a game plan.
A robust intelligent sourcing strategy should provide information about which suppliers can be relied upon to provide favorable delivery times at the most cost-effective prices.
And also which vendors can provide high volume ticket items without delay and excuse.
In our fast-paced world, customers are becoming increasingly more and more invested in getting things delivered in the shortest time possible, so retailers cannot afford to work with vendors that cannot meet this most basic requirement.
The right supplier can be an asset and the wrong supplier can seriously damage your brand and reputation.
Best Practice #2 Make Data-Driven Intelligent Sourcing Decisions
Because one of the major objectives of intelligent sourcing is the need to improve the bottom line by reducing spend, it bears that making data-driven sourcing decisions is a smart move.
In a post by Harvard Business School, The Advantages of Data-Driven Decision Making, research is presented that highlights the fact that using data when making decisions can assist enterprises to realize cost savings.
Over 49% of participants in the Harvard survey of Fortune 1,000 executives reported seeing a decrease in expenses after they used data to make business decisions.
Best Practice #3 Inter-Collaboration Pivotal for Success
Intelligent sourcing is a team affair. Everyone involved when sourcing in supply chain – vendors, retailers, and logistics suppliers must work in tandem to enhance the supply chain’s overall performance.
Without the combined efforts of all parties, intelligent sourcing becomes quite complex. Relationships are vital for the success of this initiative.
Things to Remember About Intelligent Sourcing
The digital revolution that’s fueling the changes in the retail landscape isn’t going to slow down. If anything, we’re progressing further and further into a world where most shopping will be done online.
With talk of the metaverse – an alternative augmented reality – the way people shop is going to change dramatically.
Businesses that fail to keep up with these changes risk becoming obsolete or worse yet – closing their doors forever.
Being able to keep up with the new distribution channels, digital consumers, and their needs, and all the while maintaining good relations with your vendors will require procurement teams to adopt intelligent sourcing as part of their long-term adaption strategy.
Because most of this is new territory for many enterprises it merits treading cautiously, seeking the assistance of external professionals, and consulting with other industry leaders before making any drastic sourcing changes.
Intelligent sourcing promises to change the dynamics between retail procurement teams and vendors as they both seek ways to mitigate spend and improve efficiency in 2021 and beyond.
Instead of seven-step strategic sourcing processes, procurement teams might now have to contend with slightly longer and arduous sourcing procedures as customers expect faster delivery times of items. Retail operators have no choice but to adapt in order to survive.
Not only are strategies such as intelligent sourcing beneficial but coupled with robust procurement solutions such as those provided by ProcurePort, sourcing teams are well-equipped to tackle the day-to-day complexities of doing business in the post-COVID era.
Enjoy access to safe, secure, trusted procurement solutions used by enterprises and organizations such as UNOPS, HUD.GOV, and conEdison.
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