Lost Sourcing Savings: Survey Data Suggests a Crisis (Part 3)

Please click here to read the first and second installments in this series.

If we were to point fingers at where technology can help companies drive implemented savings, these areas would rise to the top: demand aggregation, collaboration (internal and supplier), strategic sourcing (with an emphasis beyond driving to negotiated outcomes alone), analytics and architecture/information management. We won’t investigate the latter topic in this series because of the detailed analysis that our PRO team has already conducted. See:

Yet in the other areas discussed, it’s worth exploring the different technology options, beginning with tools that support demand aggregation strategies. Demand aggregation may seem tangential to savings implementation. It’s not because of the view such tools can provide into not only SKU/item-level buying history, but also underlying bill of material and related part/material information. This combined visibility can help organizations get procurement, operations, design/engineering and other stakeholders on the same page (as early in the sourcing process as possible).

Demand aggregation approaches from providers like Supply Dynamics and Co-eXprise can extract CAD attribute information from design drawings to show aggregated demand all the way down to the raw material level (if available) across different sets of BOM. As important, they can also highlight missing information and can force questions before a sourcing event (e.g., why doesn’t a specific part specification in production match the information contained in a design drawing or aggregate bill of materials?) With aggregated demand information in hand, sourcing teams can work with operations and other stakeholders to understand specific requirements and production nuances that are unlikely to surface until after a sourcing decision is made, and that can sidetrack a particular savings implementation effort.

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