Market Informed Sourcing – why don’t we hear more noise in the procurement world?

It’s a couple of years since I wrote two of our early first Spend Matters research papers for two of our first sponsors here. They covered the topic of advanced sourcing techniques – optimisation, expressive bidding, or as we called it, market informed sourcing (MIS). You can still download those papers here and here if you’re interested – free on registration.

That term, market informed sourcing, seemed to sum up what the process is all about. Allowing the market and the suppliers in it to determine the best way of fulfilling our souring needs, rather than us second guessing the market. So coming back to the topic, I ran a workshop at the BravoSolution Connect conference this month on the principles of MIS. It seemed to go down well, and my session was followed by Jeff Ryan of Bravo talking about some of their real life case studies in several major industries.

It certainly seems that interest in MIS is growing steadily. We’ve also recently seen Trade Extensions, one of the real specialists in this field, announce excellent results, showing the growth in usage of the technology and the process it enables. Yet it still isn’t something that is widely talked about in procurement circles – most procurement people still couldn’t tell you, I suspect, what it is all about. Why is that, and why isn’t there more general noise about the topic around our world?

It strikes me that maybe it’s because this is one of the few procurement process / technology areas where users are trying hard to maintain real competitive advantage. I know of a couple of industries where we see pairs of sworn rivals and enemies, and one is using MIS, whilst the other isn’t. The one that is believes they are achieving significantly better outcomes than their competitor. So it’s not a surprise if they don’t go in for too many awards, or broadcast what they’re doing, or allow BravoSolution, Trade Extensions (or CombineNet, Iasta, Keelvar...) to use them as references on their websites.

I know firms that believed they had executed category management well for years and that there could not possibly be more gains to be made. They introduced MIS – and saw a further 10 to 20% cost reduction, as well as other benefits (including happier suppliers, interestingly – one of the not uncommon outcomes we have seen from the process).

There is no doubt more and more of the largest firms in the world are using the technique, across a growing number of complex spend categories. It doesn’t work in every case of course, but if you have large, complex requirements, it’s well worth taking a look at the possibilities here. Before your number one competitor does ...

Voices (3)

  1. Bradly Davidson:

    I tried to download the white paper but found it not available.

    1. Sydney Lazarus:

      Bradly,

      I was able to download both of the papers. Which one were you unable to download?

      -Sydney

  2. b&t:

    Does this mean the death of the sealed bid?

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