Alexa Certify
The Determine
Blog
Empowering Decisions
October 3, 2018

Integrating Sourcing Strategies into Contracts.

Integrating Sourcing Strategies into Contracts.

Building on the value of cross-process, enterprise-wide solutions.

In the world of source-to-pay, the ROI of strategic sourcing strategies is only as good as the resulting contracts and subsequent contract compliance in purchasing. Creating strategic value from contract management entails choosing an enterprise Contract Lifecycle Management (CLM) solution that is cross-process, not process-based. More and more companies are coming to realize that contract management needs to cross through the entire organization from buying all the way to selling. Does yours?

When strategic sourcing decisions flow directly into contracts, sourcing teams can do much to safeguard — and maximize — the value of the strategic sourcing investment.

integrating sourcing into contracts blog diagram

Experienced strategic sourcing teams develop a sourcing strategy that is unique to the needs of each sourcing project. The sourcing strategy is based on basic project goals such as supplier consolidation, supplier discovery, cost savings, enhanced TCO, and other key elements such as:

  • Whether quantity of goods being sourced is large enough to create buying power
  • Level of risks associated with supply continuity
  • Number of potential suppliers in the market
  • Pros and cons of choosing suppliers based on region (country, continent, etc.) vs off-shore sourcing
  • Performance metrics and overall satisfaction of business stakeholders with incumbent suppliers

This type of supply market research and analysis make up the strategic context that sourcing organizations use to select the right sourcing tools and methods for individual projects. It has become increasingly common for sourcing teams to share elements of this strategy with suppliers, e.g. source everything to a single supplier or award the business to the top three suppliers (based on a combination of price and quality estimates) in each region. However, the sourcing team never shares all of the information behind their strategy with suppliers.

The complete strategy information is commonly understood by the sourcing team and also by business stakeholders who engage in the sourcing process, but without integrated solutions and data, the sourcing information isn’t automatically incorporated into contracts. This generates delays, and potentially, errors from manual processes.

As was explored during the 2018 Sourcing & CLM Strategies to Watch webinar from Determine and PayStream Advisors, when sourcing and CLM are siloed functionally, organizations lack the capability to leverage the sourcing data and supplier relationships involved in order to maximize spend management, savings and risk mitigation. It was revealing, but not inconsistent, that a webinar poll of what attendees are using now to manage contracts skewed heavily toward MS Word, Excel and shared network drives.

By integrating the overall sourcing process and contract functionalities, teams can make sure they’re working to achieve cross-process efficiency, not process-based isolation.

If you’re ready to experience all the benefits – and advantages – of integrated solution functionality, schedule a personalized demonstration of modular sourcing and/or contract management on the Determine Cloud Platform.

--> Top
Madison Logic