PROCUREMENT OPTIMIZATION BLOG

The world of procurement is changing at an ever-quickening pace due to the adoption of technology. These technological advances are affecting all areas of our lives.

During the Valentine’s Day season this year, I was reminded of how the management of sourcing and supplier relationships mirrors the way that people often navigate personal relationships. As is usually the case, our work lives mirror our personal lives and vice versa.

When managing sourcing and supplier relationships, people traditionally use the same tired methods and wonder aloud why they aren’t getting different results. They have an established supply base where they have essentially ground down their suppliers to the point that their relationships are adversarial at best. They chase price to the point that both sides lose sight of value creation and are only focused on the individual win. Much like a failing personal relationship, they have no sense of partnership. They have no way to grow together so they have no choice but to grow apart. That pursuit leaves both sides in a “doom cycle” with no other possible outcome but LOSE-LOSE!

It isn’t until people step back and evaluate the strategy of how they handle sourcing and supplier management in their organizations that they are able to see a way to break out of these serial, short-term supply relationships and envision outcomes that could deliver a successful future for all parties involved.

This future is driven by technology and, like other areas of our lives, it’s driven by cloud-based platforms that give us the best chance of finding and building long-term, value-creating partnerships that leave all parties with a better future together than they could ever have apart.

Using technology, we change how we look for suppliers to help solve the BIG challenges facing our businesses. Because of the world we live in, there is definitely “an app for that”… or more correctly, a platform that is driven by a series of apps and tools that make identifying potential suppliers that much easier.

We now have fully connected networks of companies that have already found a way to solve problems similar to ours. They have done a lot of the work for us by finding and evaluating suppliers that provide the products and services that we need. Much like Yelp, they typically have detailed reviews telling us which suppliers have the proper foundation to use as a launching pad for next phase of our organization’s growth.

Leveraging technology doesn’t stop in the discovery phase of sourcing/supplier management – no, this is where it gets fun! We take this great pool of suppliers that we have identified and we double down on technology that utilizes online sourcing tools. These tools drive online events, allowing us to interact with our new and existing suppliers in real-time. This delivers the ability to make timely decisions on which suppliers have the ability to drive long-term value for our companies.

We now bring these suppliers into the day-to-day operations of our organization.  We leverage our sourcing/procurement platform to measure the performance of our suppliers, identifying those that can truly help us drive synergy into our business.  When we utilize the platform and metrics therein, it becomes very clear which suppliers we should invite into a more strategic position in our business. These key suppliers are factored into our decisions about where to focus our strategic efforts to drive maximum benefit for our customers, our organization and our suppliers.

It is at this level of supplier engagement that the full partnership takes hold.  Much like our personal relationships, these are the relationships that last generations.  These next level partnerships are much more strategic and long-term.  Both parties are factoring the other in their strategic planning. Investments in R&D and business development are made with each other in mind.  This shared success takes a cliché phrase and turns this business relationship into the embodiment of a true WIN-WIN.

Sourcing and procurement strategies are a long journey and much like life, when we leverage technology in insightful ways, we can make that journey more fruitful and fulfilling.

by Anthony Diaz, Senior Manager