Complex Sourcing and How it Relates to Market-Informed Sourcing Technology

Last month, we launched our new briefing paper, sponsored by sourcing technology firm Trade Extensions, and titled,  What defines complex sourcing – and why does it matter? You can download the paper here, free on registration.

We explain in the paper that there is merit in looking at how complex a particular sourcing area or task is, and considering what synergies and benefits might be gained by looking at sourcing complexity as a key driver of resources, structure and approach.

The paper then goes on to identify nine factors or characteristics that define a complex sourcing exercise, task or process. Three of these are what we can define as internal factors, such as the number of internal stakeholders who are interested in the particular category. Then there are three external factors, including the number of suppliers operating in the particular market and supply constraints. Finally, we have three factors driven by the particular commercial models that are desired and possible.

The final section of the paper explains how this analysis is relevant to the technology that is now available to handle such sourcing tasks. Here is an extract.

What defines complex sourcing – and why does it matter? (Extract)

“And the more complex the sourcing exercise, the more likely it is that we are losing potential value by restricting suppliers in this manner. That is where MIS (market informed sourcing as well call it - also known as optimisation, advanced sourcing or expressive bidding) comes in. The process and the supporting technology allows potential suppliers to propose alternatives in terms of the scope of their supply, location, pricing options, conditionality and so on.

The complex mathematical algorithms that sit at the heart of the technology can then work out the best ("optimal") solution for the buyer, and then allow different options to be assessed and considered based on introducing various constraints. This means that not only is the operational challenge of complex sourcing made manageable, but the opportunity to realise the value inherent in most complex challenges can be released.

So, having analysed which of the sourcing categories and exercises that are required fall into this "complex" category, buyers should consider whether and how MIS can be used positively in those more complex cases. In our experience, even those firms that have adopted MIS often miss opportunities to use it more widely. And any large firm that has not considered the process at all is in danger of losing out competitively to those who are users”.


We hope and believe the paper will be valuable to senior procurement practitioners who face complex sourcing issues; and you can download it here, free on registration.


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