New Spend Matters Paper – an Integrated Approach to Procurement Technology

Thomas Kase is a fairly recent addition to the Spend Matters US family, although he’s no inexperienced junior – he’s had an impressive career already in technology, sourcing and analysis.  He’s working with Jason mainly on technology analysis, and he’s another guy (like Jason) who makes me realise how much I don’t know about the topic!

Anyway, his first solo SM research paper was published just before Christmas and it’s free to download (on registration) here. It is titled “Sourcing, Contract Management and Supplier Management Cloud – Business Users Benefit from Savings Enablement”.

While it starts with a discussion of the benefits of the cloud capabilities and how they have driven improved procurement performance, the paper’s main themes are around the value of linking different stages of the sourcing process, from spend analysis through sourcing to contract and supplier management. Being able to integrate the process from an operational and a systems standpoint brings many benefits, from speed of savings realisation to improved contract compliance.

Advances in technology enable such integration “with off-the-shelf capabilities without significant customization”.  Kase believes that, going forward, organisations will demand even tighter linkages between sourcing and other capabilities, to “create a singular view of the sourcing activity by leveraging a common record system, inclusive of suppliers, payment terms, item specifics, groups/divisions/organisation, codes and more”.

The paper also includes a case study from a major food and beverage flavouring and ingredients company. They have transitioned from Ariba Sourcing to SAP Sourcing OnDemand (cloud environment), driven largely by the desire to integrate sourcing with other business processes – for instance, SAP is used across much of the manufacturing operation.

The benefits of this approach are described, and there are also some good tips for successful implementation from the firm in question. For instance:

The choices companies make in third-party services for enablement and implementation are also critical. Here, the company suggests that cultural compatibility is essential, and in their case, the SAP implementation team was vetted extensively and has worked out “really well” – in large part not only because of their experience but because they were not “a bunch of suits” and were willing to roll up their sleeves alongside internal company team members.

Finally Kase gives us his recommendations; there are several but here’s the first to give you a flavour.

Re-evaluate your sourcing platform decisions (especially those that are loosely-coupled today) that may have been made in the past when the role and scope of procurement and sourcing might have been more confining – dashboards, analysis, reporting, and trend tracking are examples of areas that have evolved tremendously over recent years.

If you’re at all interested in procurement technology strategy and operations, it’s well worth a read.

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