In this briefing paper, we look at complex sourcing and consider which factors contribute towards making a particular sourcing task “complex.” It is important for procurement practitioners to understand this as it defines where risk and opportunity tend to exist and also highlights where advanced sourcing technology can be best used to help deliver the benefits.
The paper proposes nine factors that drive complexity. Some are determined by internal factors, such as the breadth and diversity of internal users or budget holders who have an interest in what is being purchased. Then there are external factors, and also those driven by the commercial models chosen or prevalent in that market, such as multi-level (tiered) supply chain options for structuring the contracts.
In the final section of the paper, the use of “Market-Informed Sourcing” (advanced sourcing technology) is briefly discussed. This uses advanced mathematical techniques to solve such complex problems, and understanding what defines complexity will also help to indicate where this type of technology can potentially bring the most benefit to organisations.”