Strategic sourcing is the practice of sourcing goods and services through strategic planning and evaluation of all available sources and providers. It is an important element of a successful business strategy, as it allows businesses to save time, effort, and money while still obtaining the best quality goods and services. To maximize the benefits of strategic sourcing and make it more efficient, businesses are increasingly turning to procurement software.
What is Strategic Sourcing and How Does it Benefit Your Business?
Strategic sourcing enables businesses to ensure that they are getting the best quality goods and services at the lowest possible cost. By looking at all available sources of supplies and providers and conducting a thorough analysis of their merits, businesses can make an educated decision about which to do business with. Benefits of strategic sourcing include improved supplier relationships, increased cost savings, better cost management, and improved quality assurance.
In addition to these benefits, strategic sourcing can also help businesses to reduce their environmental impact. By sourcing from suppliers who are committed to sustainability, businesses can reduce their carbon footprint and help to protect the environment. Strategic sourcing can also help businesses to reduce their reliance on single suppliers, which can help to reduce the risk of supply chain disruptions.
Benefits of Utilizing Procurement Software for Strategic Sourcing
The use of procurement software offers several advantages in terms of strategic sourcing.
- Improved Spend Analysis: Procurement software provides real-time data on an organization's spend patterns, making it easier to identify areas for improvement in the strategic sourcing process. A survey by the Aberdeen Group found that organizations that use procurement software are able to reduce spend by 10% on average. FactWise empowers procurement organizations to increase savings up to 25% via dynamic and prescriptive analytics.
- Streamlined Sourcing Process: Procurement software provides a centralized repository for all sourcing data, making it easier to manage the sourcing process and reduce the time spent on manual tasks. A report by Forrester found that organizations that use procurement software are able to reduce the time spent on sourcing by 20%. FactWise enables teams to increase efficiency by up to 20% and governance by up to 31%.
- Better Supplier Relationship Management: Procurement software provides tools for managing supplier relationships, including contract management and performance tracking. This leads to improved supplier performance and reduced risk of supplier-related disputes. A survey by ISM found that organizations that use procurement software are able to reduce the risk of supplier-related disputes by 20%.
- Enhanced Collaboration: Procurement software facilitates collaboration between procurement and other departments, leading to improved strategic sourcing processes. According to a survey by the Aberdeen Group, organizations that use procurement software are able to achieve a 20% increase in collaboration between procurement and other departments.
How to Evaluate the Quality of Your Strategic Sourcing Software
When evaluating the quality of a procurement software system for strategic sourcing, there are several factors to consider. First, businesses should look at the system’s features and capabilities. They should determine if the system can handle all of their current needs and if it will be able to keep up with any future changes or growth. Additionally, businesses should consider the user experience when evaluating a system—how easy is it to use? Is the system intuitive and user-friendly?
Finally, businesses should evaluate the system’s security protocols to ensure that their data is safe and secure. They should also look into the customer service and support offered by the vendor to ensure that they will be able to help with any issues that may arise.
Using procurement software for strategic sourcing can offer numerous benefits for businesses. By taking the time to evaluate the various systems available on the market, businesses can ensure that they are selecting one that meets all their needs and provides them with the best value for their money.
In conclusion, procurement software can provide significant benefits for strategic sourcing, including improved spend analysis, streamlined sourcing processes, better supplier relationship management, and enhanced collaboration. Companies such as Walmart, General Electric, and Pfizer have demonstrated the success that can be achieved with this technology. FactWise helps organizations reduce time spent on repetitive, manual low-value-add tasks and focus instead on more strategic areas, including optimizing direct sourcing via strategic sourcing.
At FactWise, our singular focus is to build truly distinctive procurement software that delights users and generates sustainable positive impact for the organizations we serve, by providing transparency and insights to leaders, streamlining and automating processes to improve efficiency, and driving bottom-line impact by unlocking savings potential.