The Determine


Vision. Insight. Control.

November 19, 2015

Optimizing Strategic Sourcing Efforts – Insight From Research: Part 1

Strategic sourcing suites are widely used by many in procurement today. Recent research from Gartner notes that majorities of large U.S. and Western European-based companies have invested in one, and rarely buy an e-sourcing application by itself anymore.

As a technology, eSourcing has been around for over a decade. But to enhance functionality beyond RFx and reverse auctions, most purchases of strategic sourcing today also include integrated spend analysis, contract lifecycle management and/or supply management solutions. Moreover, as a result of its widespread use, the solution area is also entering what is referred to in the 2015 Gartner Hype Cycle for Procurement and Sourcing Solutions as the “Plateau of Productivity” (i.e., where real-world benefits of the technology are demonstrated and accepted).

Further confirmation of how strategic sourcing has evolved is based on a recent report published by Ardent Partners. Surveying over 300 supply chain executives, “The State of Strategic Sourcing 2015” benchmark report contains a number of interesting insights into how procurement is evolving and what divides good from bad strategic sourcing efforts.

One major finding is that modern procurement organizations are seen as fundamentally important to business success and have matured from clerical and operational to strategic and agile business functions. Based on today’s competitive environment, leading CPOs value agility and focus their agendas on innovation that supports collaboration, connectivity and source-to-settle automation.

Not surprisingly, more than half of respondents reported that realizing more savings is still their primary pressure, but another high priority is increasing overall effectiveness and influence of their departments. Respondents said that the best means of achieving savings is often through improved use of technology and that investing in technology was a top priority in 2015, and is expected to remain the #1 priority for the next three years or more.

In this regard, what is the divide between those doing it well and those who are not with the process and adopting the technology? What are the best-in-class doing that their peers are not? What has changed in the past year? For this see part 2…

* If you’d like to read the Ardent report in full, you can download the report here. Read about Best-in-Class competencies for sourcing functions including CPO’s top challenges and drivers for success.

By Constantine Limberakis