High inflation and rising interest rates are bearing down on companies across the U.S. More than ever, organizations need strategic sourcing to identify opportunities and push past these fierce economic headwinds.
Unfortunately, if you’re a procurement leader, you may feel like you don’t have the tools or time to give strategic sourcing the attention it deserves. However, there are ways to magnify your strategic sourcing plans. In this article, we pin down three ways to sharpen your focus on strategic sourcing and carve out more capital for your business.
Why Strategic Sourcing Is Important
Strategic sourcing has always been important, but the current rocky economic climate has shoved it to the top of corporate leaders’ priority lists. That’s because strategic sourcing allows you to expand supplier discounts, build supply chain resilience, negotiate new deals, lower costs, and more. When procurement is gathering clear spend data and using it to trim costs and dig up cost-saving opportunities, it positions the organization to not only overcome spending challenges but also grow in any economic climate.
The Challenges Standing in the Way of Strategic Sourcing
With strategic sourcing playing such a pivotal role, it should be high on your to-do list. However, many procurement leaders run into common problems when focusing on strategic sourcing. Here are a few hurdles holding up procurement:
- Your spend visibility is limited: Too often, a procurement team will try to dig into strategic sourcing only to find their spend visibility is limited. If employees are buying outside of your digital system or enterprise resource planning (ERP) system, you won’t see how money is flowing. Or maybe your system simply isn’t tracking the spend information you need. In all cases, when your spend visibility is blocked, you can’t see where money is going, where you could be saving, how to improve supply chains, or any other path to strategic sourcing.
- You’re spending too much time on tactical processes: Many procurement professionals burn up hours maintaining data, updating documents, tracking orders, and collecting information to “CYA.” Every second you spend on these tactical processes and tasks steals time from your strategy.
- Rogue spend is running rampant: In another frustrating scenario, procurement leaders will spearhead a digital transformation plan and adopt a digital payment or ERP, only to have employees “go rogue” and spend with unapproved suppliers. If your digital system is difficult to use, employees might be avoiding it, making unauthorized buys, and limiting the amount of spend data you can see.
- Supplier relationships are suffering: Even if your spend data is rock-solid, it’s impossible to execute your procurement strategy if you have weak or poor supplier relationships. Unfortunately, everything from delayed payments to payment complications to communication mishaps can sever your supplier relationships. And any time supplier relationships sour, you have to recalibrate your strategic sourcing plan.
How to Surpass Your Strategic Sourcing Goals
With the right SpendTech™—meaning spend management technology—procurement leaders can clear the barriers that block their strategic sourcing plans. Here’s how you can use technology to craft and accomplish your strategic sourcing goals:
Set up a centralized marketplace for transactions.
The fastest way to eliminate rogue spending and widen spend visibility is to start using intuitive digital procurement technology. Best-in-class systems are easy to use and give employees a central digital marketplace where they can purchase from a network of approved suppliers. That way, user adoption grows, your spend under management increases, you can see your company’s spending patterns, and you’ll have the insights you need to inform your strategic sourcing roadmap.
Digitize your P2P processes.
By digitizing your procure-to-pay (P2P) processes, you can free up more time to focus on strategic sourcing. Leading SpendTech™ will integrate with a range of ERPs and include a wide application programming interface (API) library. That way, you can compress all of your procurement processes, insights, and workflows into a single platform. In turn, your team spends less time moving data from one system to the next, efficiency jumps, and you create more time to focus on strategic sourcing.
Increase efficiency with automation.
Automation can also drive up efficiency and empower your procurement team to complete strategic sourcing. Advanced mobile and modular SpendTechTM lets you send purchase requests, approve orders, purchase items, and read real-time budget details–all in a matter of clicks.
Not only does this technology chisel out more time to strategize, but it also automatically generates live spend insights. So you can see where money is being spent, what discounts your company is using, and where there are opportunities to build more profitable supplier relationships. Automation also cuts down human errors, so payments speed up, your team makes fewer mistakes, and your relationships with suppliers grow.
Learn to Improve Your Strategic Sourcing
By embracing technology, procurement leaders can direct more attention to strategic sourcing. As a result, you can secure more supplier discounts, negotiate better contracts, lower costs, build supply chain advantages, and give your company an edge.
Are you looking for more ways to improve your procurement team and organization with technology? Download our free guide, Spend Matters: The Evolution of Corporate Procurement Systems, to learn how far procurement technology has come and how you can use the latest advancements to surpass your procurement goals.
