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James Jenkinson, VP and head of technology at Efficio, talks strategic sourcing and what it will take to bring the concept into the 21st century.
Strategic sourcing has been around for almost 30 years and while it revolutionised procurement at the time, its progress since has stalled becoming something of a simple and straightforward tendering process. Something needs to change if the function is to once again propel itself forward.
President John F Kennedy once famously said: “We choose to go to the moon in this decade and do the other things, not because they are easy, but because they are hard.” He could just as well have been talking about sourcing today. Sourcing, and eSourcing, in particular is a difficult process and there is no “one size fits all” approach. There is no standardised software package.
In the real world, the permutations and combinations of RFP (request for proposal) structures are infinite. It is for this reason that eSourcing platforms have not penetrated and are used for little more than RFP emails and the use of Microsoft Excel, now of pensionable age, persists, thrown a lifeline by its unlimited flexibility yet shackled by its boundless inconsistency.
Real world pricing is complex and even looking at something as nominally comparable as office supply tenders demonstrates that no two contracts or processes are the same. This is a real challenge for technology providers.
Most eSourcing modules are built on legacy platforms – many of which are not even cloud based. At times, they just feel like vehicles to sell software licences. ERP (enterprise resource planning) is where the cloud-based action is right now with procurement just hitching a ride. It will be years before the resources trickle down to them.
Wouldn’t it be great if we could embed human procurement know-how into a piece of technology?
Procurement experts building functionality for procurement practitioners, not software engineers building programs for marketers to sell. Given procurement is a repeatable process, very little automation exists, but we are on the cusp of being able to change this.
The P2P world probably has the highest level of automation especially around catalogue management but, beyond that, existing ERP, eProcurement and eSourcing applications do not provide the level of automation that should exist today. In most cases, procurement professionals are having to recreate each purchasing event time and time again. They are also having to do all the analysis manually – an area that could be completely automated if the data was organised in the right way.
There are breakthroughs coming. Big data and automation are on the cusp of delivering truly effective eSourcing across categories and geographies. After thirty years hard service, it is just about time to retire Excel. Perhaps we should build a statue to it.
James Jenkinson is VP and head of technology at Efficio
This contributed article has been written by a guest writer at the invitation of Procurement Leaders. Procurement Leaders received no payment directly connected with the publishing of this content.