In the midst of global turmoil, fluctuations in supply and demand have prompted industry leaders to frequently hold supply events amid the chaos.
As supply chain challenges persist, it is imperative that companies equip themselves with the technology that allows for standard and complex supply events. This is especially true as the need to drive inexpensive targets around sustainability initiatives and speed of delivery
And And more heights.
As a result, companies are increasingly modernizing their suite of technology solutions to include streamlined e-outsourcing tools And Sources of optimization solutions. This dual approach allows purchasing teams to attack a broader range of sourcing needs, while also helping to focus more data and insights, improve sourcing outcomes, address new priorities, and respond more efficiently to disruptions.
Basic vs Optimization: What’s the difference?
Basic e-outsourcing and optimization tools are two complementary technologies that can work in tandem to meet different needs. The main difference between the two is the level of decision support provided and the increased speed of analysis.
Essential e-outsourcing tools include e-auctions and are well suited to facilitating grant positions that prioritize low cost without having to consider multiple factors. When a company is looking to procure an indirect product in bulk from a single supplier (think office furniture or IT equipment), this important technology often gets the job done. Buyers can easily make a decision based on the best deal available.
However, these solutions cannot take into account the additional considerations posed by complex issues or competing priorities. In today’s world where shipping container prices are rising, shipping delays are breaking records, and consumer demand continues to fluctuate rapidly, a simple electronic supply tool alone will not suffice. Add to that any corporate goals related to supplier diversity and sustainability, for example, and your buyers will have more to bargain about. That’s when resource optimization outperforms basic online resource tools.
Improved sourcing enables teams to bypass direct decision-making to award awards based on “lowest cost takes all”
. Buyers can collect a wide range of price and non-price bid information from suppliers, then analyze multiple award scenarios that can balance these criteria and other constraints. This technology has also been proven to bring some of the greatest ROI returns on purchases.
Frequency and complexity: time to improve
Both core e-outsourcing tools and optimization technology are critical due to the constant flow of sourcing needs. Combining two solutions that work side by side gives companies the flexibility they need to adapt and evolve in today’s market. The best practice is to run the two tools in the same environment to handle different types of spending. However, the key is knowing when to use each tool.
Traditionally, optimization has only been used for large annual supply events. While sourcing optimization is ideal for large and infrequent annual decisions, there is ample opportunity for it to be applied more routinely as an increasing number of sourcing events gain complexity and importance amidst the chaos.
On top of managing more supply events than ever before, today’s buyers also need to make awarding decisions based on more than just the lowest price. Today we are seeing limited capacity, increased CO2 emissions, longer charging times, increased risks and more. Failure to evaluate these factors puts the buyer and his business at risk.
Making a strategic award decision requires balancing every factor in a complex equation. What is the social responsibility of this resource? Was it known to be reliable in the past? How quickly can you submit? Do they offer price packages? Improved sourcing answers these questions – and others – allowing companies to see all the cards on the table – and create a winning hand. It automates the validation and completeness of data and saves your team a serious headache.
Stronger Together: A Feasibility Study for Both
While simple outsourcing tools are effective for renewing a material — or renewing a contract with an old supplier — optimization is required for those decisions that involve more risk. There are probably many new possibilities to choose from to meet the needs of changing capacity or quantity levels. This strategic spending requires more insight and insight, and optimization is the technology of the job.
The main conclusion here is that relying on limited technology alone is no longer feasible. When implementing a standard bidding event, a simpler tool can be the first choice and will provide quick and easy results. When making very complex and important decisions about sourcing, optimization should be in the right hands.
The dual sourcing approach gives procurement leaders the most in-demand advantage in today’s challenging times – flexibility. Flexibility is as simple as two technologies working together with one common goal.