Why Invest in Strategic Sourcing Software?
Strategic sourcing software, unlike purchasing software, drives the decision-making behind your supply chain rather than the actual purchasing. Strategic sourcing software lets you gather data from numerous vendors or suppliers and compare that information in graphical, table and other formats so you can make the best decision for your bottom line.
Many strategic sourcing software options include features to help you manage your bidding and contracting processes, which allows you to create a solid foundation for managing your business's future purchases. Some strategic sourcing software options include QLM Sourcing Enterprise from QStrat, Orion's AMT and Puridiom. Check out our other articles on strategic sourcing solutions here.
Strategic Sourcing Software: What to Look For
Sourcing needs are obviously different for each organization, which is why software companies cater to companies of all types and sizes. You can find software built for your niche, opt for software designed to service small or large firms, or choose a comprehensive solution that is likely to grow with your company. In addition, below are a few other important considerations to keep in mind when shopping for strategic sourcing software.
Cloud vs. Client-Based
A top consideration when investing in strategic supply chain management software is whether you want to host the solution yourself (on-premise) or use cloud-based software. Most companies, particularly those in the small to midsize range, opt for cloud solutions for convenience and cost savings. Hosting an on-premise solution comes with its own set of considerations, though, which include whether you need to make potential upgrades to your hardware and if you currently have in-house staff to maintain the software or if you would need to hire additional staff. Companies in highly regulated environments, such as healthcare or banking, may still opt for client-side hosting because of perceived security benefits.
If you regularly work with the same vendors and suppliers, strategic sourcing software with built-in contract management might be right for your organization. Contract management lets you record information about agreements with vendors and track their adherence to service levels. Not only does built-in contract management offer features such as notification when contracts are due to expire, it may help save you money. Many times, vendors are required by contracts to pay fines or reduce prices if they don't meet agreed-upon service levels.
Quotes & Bid Negotiation
The quote and bid process is a fundamental part of the acquisition process. It ensures you get the materials you need at the best price possible. Reviewing quotes from numerous vendors can be tedious, particularly when the offerings are apples to oranges in nature. The right strategic sourcing software can provide you with tools for comparing quotes quickly and tracking progress through negotiation periods.
Depending on your company's buying volume and sourcing strategy, automation might be a desirable feature in your software. Some examples of automation include notifications when quotes, bids or contracts are set to expire as well as daily or weekly updates that detail the latest supplier responses or pricing changes. Be sure to look for software with the automation features you are likely to use the most while also being mindful of additional bells and whistles that, though nice, may unnecessarily increase the software's cost.
The right strategic sourcing software can improve the efficiency and accuracy of your sourcing process. When you select a software application that matches your needs, the benefits you reap can include decreased costs, better inventory and vendor control, and increased customer satisfaction.