What is Strategic Sourcing Software?
Strategic sourcing software, known as e-sourcing software or, automates the sourcing process to collect the information needed to complete the purchasing process. This software is mainly used in departmental purchasing and is known as a unique type of e-procurement software.
Sourcing software streamlines sourcing decisions in real-time so you know when and where to get the goods and services you need. It helps your overall supply chain performance. While part of the e-procurement process, strategic sourcing solutions differ from procurement systems in that they focus more on collecting the data needed to make the purchase. It’s different from something like purchase order software that focuses not only on the financial aspect of buying goods or services but also on the lifetime of costs.
The best e-sourcing software will provide and bid from multiple suppliers within one portal, the data will be aggregated for image comparison, and your decision-makers can generate cost savings and suppliers competition will increase.
Features of strategic sourcing software
Spending Analysis: Helps identify, collect, clean, group, and categorize your spending data. It helps make purchasing decisions and improve efficiency.
Bid/Quotation Creation: Create a quote (RFQ) request containing quotes from potential bidders. Allows suppliers to submit bids based on how much they charge for a product or service. Also called an invitation to bid.
Application Request (RFP): A document that requests a proposal through a bidding process. Includes a funding announcement that describes the bidding process, the terms of the agreement, and the format of the bid.
Contract Management: The software acts as a contract tracking software solution that manages, creates, executes and analyzes contracts between customers, suppliers, partners and more.
Supplier management: A workflow that competes with your suppliers in competitiveness, customer satisfaction, profitability and more. Evaluates whether suppliers are performing to your organizational needs and identifies areas for improvement.
Advantages of strategic sourcing software
The use of strategic sourcing software aims to minimize purchasing costs without interrupting the supply chain or production process. Many procurement teams sourcing software and procurement professionals look to sourcing software to maximize costs and reduce profitability in their business. Some of the superior benefits include:
Automate your cost analysis and tracking process
Many businesses can lose the connection between the savings claimed by the purchasing department and the savings recognized by your finance team. This creates a distribution of identified savings, approved savings and a feeling of savings. Any differences or misunderstandings can lead to mistrust between the different departments in your organization.
The right strategic sourcing solutions will turn your spending data into solid opportunities, monitor the savings pipeline using analytics tools, and bridge the gap between acquisitions and financing. Most people may be presented with a quick savings tool, which may open up more opportunities for your retail organization. Everything you think about your employees can be shared across your organization, making them more visible and unnoticed. You are tracking all kinds of ideas until approval makes your savings pipeline more transparent.
Follow your cost-saving measures.
The main goals of any supply chain management operation is to maximize your profits. One way to do this is to save money that your organization may not be aware of. Savings on purchasing costs can be realized by focusing on three basic areas.
- Buy demand management
- Supply-Based Management
- Total cost management
Demand management in purchasing takes into account reducing consumption, spending on sustainability and improving product properties. Reducing consumption will ask the question, “Does our company really need it?” Consider stability tools to group related items in bulk and take advantage of volume discounts. Improving product descriptions is important to avoid additional costs for the items your company purchases, such as unnecessary warranties that you may not need or benefit from.
Supply-based management takes a deep look at your supplier to increase your competition, reshape your supplier relationships and restructure your supply chain as a whole. Strategic sourcing solutions can be as simple as finding additional providers and comparing their rates. If this is not available to you, it is always a viable option to work with your suppliers to reduce costs. Most importantly, consider moving from direct purchase from a manufacturer to a distributor model (or vice versa).
Total cost management looks at the total cost of your property through inventory costs. Adjusting your inventory stacking methods (such as FIFO, LIFO, or JIT) can significantly reduce inventory costs. Alternatively, your company may consider moving away from internal tracking/storage and seeking an external logistics company (3PL) to handle your supplier’s managed inventory needs.