I had the opportunity to sit in on Spend Matters lead analyst Thomas Kase’s e-Sourcing Survival Guide talk at the Commodity / PROcurement EDGE Conference in Chicago, and was surprised to see it take an entertaining detour down the road of supply risk management. When implementing an eSourcing solution, perhaps the greatest benefit is the amount of data — and data visibility — your product of choice avails, often in real time. One of the hidden benefits to that real-time data is being able to elevate the visibility of risk management.
According to Kase, risk management is “procurement’s #1 job,” which got a lot of heads nodding around the room. Spend Matters’ Pierre Mitchell was also in the room, and he agreed: “If you can say, your properties are at risk, your revenues are at risk, should we do anything about it? It brings [procurement’s] visibility to the executives.” “Now you have business case,” continued Mitchell. “You have to find the natural risk owner. You’re protecting the supply performance outcome, the continuity of supply. So risk could be around price, that’s how you have frame SRM. You find the risk owner, and you say it’s the insurance policy you need, and you need to to make a decision if you want that insurance. I’m just bringing you that information.” “We accept no responsibility for advice not taken,” laughed Kase.
This all speaks to a consistent problem in public-sector procurement, as we try to elevate its visibility, and bring it to the executive table. If e-Sourcing solutions allow that very visibility and demonstrability we crave—via supply risk management or the various other data points (including demonstrated cost savings)—then it’s worth consideration. Of course, public-sector practitioners are limited in their choices somewhat, though Kase went on to say it’s important for organizations to not just adopt one solution: Different departments have different needs. Beyond that initial discussion, though, was a thorough examination of how companies can implement e-Sourcing, and what pitfalls to avoid.
Of course, public sector procurement will be somewhat limited by what they can use, though Kase suggested asking what your immediate goals are for the software, and to look to align procurement strategy with the broader organizational goal (including things like e-invoicing, procure-to-pay, etc.). Kase also said it’s important to address five core requirements for any solution: price, quality, agility, visibility and that it meets all stakeholder needs.
Another aspect that public-sector practitioners may find useful is the ability to funnel and filter suppliers, and make important information accessible. “If you think of an RFI, the RFI gets all of these interesting data points from the supplier, but then it sits there in that event, forgotten,” said Kase. “So the next time a buyer goes out and invites a supplier to an event, they ask for same darn thing again because it’s a new event, and it winds up wasting huge amounts of time on both sides. If you have a vendor management system, it becomes a massive RFI repository with contract management capabilities, and suppliers can go back in and update their certificates, capabilities, what have you. It compresses the whole sourcing cycle.”
Most importantly, said Kase, is that buyers remember that technology is only an enabler, and that it’s important to have a solid structure and organization, defined processes, leadership, adoption. And, the former Japanese resident said, orgs should exhibit kaizen, the drive to always improve.
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