Every business’s goal is to generate profits. Every business, in theory, seeks to optimize its resources, thereby keeping costs at a minimum, which, in turn, leads to higher profit. Businesses, especially large corporations, invest significantly in supply chain management, or SCM, wherein the business will implement a strategy that streamlines activity during the procurement process so that the supply chain is as efficient and economical as possible. The solution to the issue is within a strategic sourcing process.
While beneficial, a basic SCM strategy does not see the supply chain’s “big picture.” Imagine that a business, in addition to optimizing costs through a basic SCM, can use analytical software to determine the best overall strategy to optimize profits. A business can accomplish this through a strategic sourcing process, which provides a business with a bird’s eye view of the supply chain when managing its procurement process. ProcurePort’s eProcurement on Demand software empowers businesses to take that next step through strategic sourcing. Its array of strategic sourcing software creates a digital avenue to optimize procurement.
The Strategic Sourcing Process
Strategic sourcing goes beyond just finding the lowest priced materials during the procurement process; it considers various factors in determining the best value for a business that will optimize costs. The strategic sourcing process considers a business’s purchasing budget, its ability to negotiate with suppliers, and suppliers’ market conditions. What’s more, the process of strategic sourcing should be used to constantly re-evaluate a business’s procurement and conduct periodic audits to determine whether the supply chain is truly as efficient as possible.
Strategic sourcing should be used to focus not only on the present but also to look at what parts of the supply chain need tweaks so that the supply chain will remain optimal in the future. The key components of the strategic sourcing process are:
- Spend analysis
- e-Sourcing and eProcurement
- Contract management
- Supplier management
- Savings management
Spend analysis is the process wherein users gather, cleanse, organize, categorize, and analyze spend data in determining the most effective way to decrease costs. Through the use of ProcurePort’s spend analysis software, users can gather data from across all business streams and have real-time numbers that most efficiently identify a company’s strengths and weaknesses. It allows you to immediately identify areas of non-compliance so you can quickly repair problem areas in your supply chain.
e-Sourcing and eProcurement:
While procurement describes the actual purchase of materials and parts that are necessary for a business, the step prior to procurement – sourcing – includes identifying the necessary materials and parts and negotiating with vendors who supply those materials and parts. Thus, e-Sourcing is the electronic version of sourcing where most or all of the sourcing is done electronically. It is estimated that a business spends between 50%-70% of its budget on materials and other supplies. As such, having proper sourcing is crucial for a business.
e-Sourcing uses the power of technology for business sourcing. ProcurePort’s e-Sourcing software provides users with an easy to use platform that allows them to quickly and efficiently collect quotes and supplier information.. In addition to and complimenting ProcurePort’s RFQ software, its reverse auction software, can be used for real-time price negotiation with suppliers globally.
Contract management is the lifecycle management of contracts with vendors. It is critical for a business to properly file its contracts in the right place so it can easily access those files for audits and other purposes. ProcurePort’s contract management software allows a business to store all contracts in a single repository that is easily accessible 24/7. Additionally, the solution also sends contract expiration alerts so that the buyer can plan the contract renewal process.
Supplier management is the measurement and analysis of a supplier’s performance over a given period of time. It is critical to continuously monitor a supplier’s performance so that a business can optimize its relationship with that supplier. Supplier management is also about creating an enduring and lasting relationship with a supplier. Having a strong relationship affords a business the ability to collaborate with the supplier to find the most cost-effective model for supplying the business. It also affords the business the ability to point out weak spots in the supply chain and interface with suppliers to produce a solution.
ProcurePort’s supplier management software provides users with an easy-to-use checklist for rating its experience with suppliers. Having a solid rating system helps a business identify not only the most cost-effective supplier relationship but also the best collaborative relationship.
Savings management helps increase corporate agility by mapping savings and forecasting future costs. This provides a business with reference data to both look at today’s bottom line and to be forward-looking with respect to future costs. It also tracks items like delivery performance so that your business receives supplies when it needs those supplies. Procuring cost-effective supplies after such supplies are needed does not make for an overall cost-effective performance. Making determinations about costs must include inserting those cost-saving measures into the supply chain. ProcurePort’s savings management software provides users with power to manage procurement costs.
You may also be interested in: Leveraging Spend Analysis Software to Monitor Supplier Compliance
Contact ProcurePort to evaluate your Strategic Sourcing Process
Your business wants to maximize its profits; ProcurePort has the solution. Contact us to see how we can help by calling 866.643.8153 or send us an email: firstname.lastname@example.org