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Automation Ahead of Its Time: Sourcing Optimization

May 18, 2021

author:
Kelly Barner
Keelvar’s note: We are pleased to welcome Owner and Managing Director of Buyers Meeting Point, Kelly Barner, as our guest author for this content. This article also features as a foreword in our Buyer's Book Volume II, Making the Case for Sourcing Optimization.

Procurement has been gripped by the buzz surrounding emerging technologies for the last couple of years. We can hardly contain our excitement over the idea of applying Artificial Intelligence (AI), MachineLearning (ML), robotic process automation (RPA), and blockchain to age-old spend management problems.

Some industry leaders have already secured their place as early adopters, and there is little doubt that these technologies will unlock tremendous value for all of procurement in the future – but most enterprises need solid solutions to complex problems now. What many procurement teams may not know – or may have forgotten – is that there is an equally sophisticated technology already available and well proven: sourcing optimization.

In some ways, sourcing optimization was ahead of its time. In the early 2000’s when it first entered the scene, many procurement organizations were not yet addressing spend categories that justified its use, and, if they were, they weren’t mature enough to take the level of approach that optimization facilitates.

More than anything else, optimization harnesses a way of thinking about and qualifying spend management options relative to each other. It combines data and business strategy to become science. Procurement is finally ready to think in terms of constraints and scenarios.

We have proven that we can manage ‘heavy lift’ spend categories without losing perspective of the value-beyond-savings the business needs to build or defend a competitive advantage.

In this comprehensive ebook, we read about some of the critical achievements that optimization can bring within procurement’s reach today:

Scalability and Repeatability: By escaping the clutches of Excel for analysis, procurement can satisfy every ‘what if’ scenario without delaying business progress. New or updated bids require just a re-running of those scenarios, not a return to the beginning of cumbersome calculations.

Fully Leveraged Supplier Capabilities: When supplier proposals are bound by the limitations of manual analysis, tangible value is left behind. Optimization removes this roadblock for the benefit of everyone involved.

Knowledge Retention: Creating a repository of sourcing strategies can deliver next-level results in subsequent projects. Optimization records live centrally beyond the project and are based on logic that can be easily transferred between project leads.

Greater Stakeholder Engagement: Despite the progress that has been made, many stakeholders still see procurement as an administrative obstacle. Demonstrating cost and benefit trade-offs at the category level positions procurement as an expert without presenting a threat to the business’ ownership of the domain.

There is always a next frontier in procurement, and today we are rightly focused on the use of automation to scale and democratize our impact. The choice is not between optimization, AI, ML, RPA, and blockchain, but how we can best combine them.

Perhaps most importantly, procurement should implement all of these tools with the intent to implement them enterprise-wide, using them to empower distributed buyers to take control of enterprise spend in alignment with the company’s goals and objectives rather than positioning them as ‘so complex only we can use them’ and artificially limiting our impact.

We cannot implement technology for technology’s sake; making the business case is a crucial first step, as this ebook illustrates.

Kelly is the Owner and Managing Director of Buyers Meeting Point and has worked in procurement for nearly two decades, spending time as a practitioner, consultant, and independent thought leader.

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