Beyond Logistics: 6 Non-Traditional Categories Where Companies Should Apply Sourcing Optimization

agsandrew/Adobe Stock

What exactly is sourcing optimization, and where can it be applied, besides the obvious areas?

Earlier this month, Spend Matters analysts Michael Lamoureux and Tom Finn teamed up with Garry Mansell, sourcing optimization general manager at Coupa, on a webinar on this very topic, “Sourcing Optimization in New Categories: A ‘How-To’ Guide.”

As the webinar title suggests, this isn’t about logistics or MRO, but rather some more non-traditional categories — six to be exact — where sourcing optimization can bring significant savings.

What Is Sourcing Optimization?

“Before we can talk about sourcing optimization, we have to talk about strategic sourcing,” said Lamoureux, kicking off the webinar. “Generally, it is a process that helps you maximize the value of each purchase made by your company.” This value can come in the form of savings, of course, but it also includes value-add services, risk minimization and better supplier relations.

Many companies are already using strategic sourcing in their direct categories, but Lamoureux warned that the savings possibility may be minimal, especially if your company has been sourcing those categories aggressively for the past decade.

Instead, indirect categories may offer significant savings opportunities, especially if your company has never strategically sourced them.

This is where sourcing decision optimization comes in. If we want to get technical, Lamoureux explained, a good definition for sourcing decision optimization is the application of rigorous analytical techniques to a well-defined scenario, to arrive at the absolute best decision out of a multitude of possible alternatives in a rigorous, repeatable and provable fashion.

Optimizing the Sourcing of Non-Traditional Categories

While the majority of the webinar attendants — and probably sourcing professionals overall — are familiar with e-sourcing, Mansell noted that the areas of logistics, packaging and MRO are most likely to get the sourcing optimization treatment.

“Almost everybody buying in those areas have used some sort of e-sourcing,” Mansell said. “But what we’re going to talk about today are the areas where it hasn’t got so much penetration.”

These are the aforementioned six non-traditional areas where companies ought to consider applying sourcing optimization:

  • Marketing
  • Fleet
  • Subscriber services
  • Legal
  • Facilities
  • Direct materials

Mansell emphasized that these areas are not different from the traditional categories. You are still buying units, for example, although these might be in the form of hours rather than products. “If you’re buying marketing, what you’re doing is buying hours of people’s expertise,” he said.

According to Mansell, regardless of what products or services you are sourcing, a crucial question to ask is, “How am I going to decide who wins my business?” If you can answer that question truthfully, he explained, you the know what piece of information you need to capture from your bidders.

“In that sense, it’s no different if you’re buying marketing or if you’re buying logistics,” said Mansell.

You can find the full webinar replay, including the Q&A session, here.

Share on Procurious

Discuss this:

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.