What is Sourcing Enablement?
Hello, and welcome to Arkestro Insights, a blog about how sourcing enablement can improve business supplier negotiations and operations.
Sourcing enablement is a set of capabilities that help business professionals manage the process of supplier negotiations, which includes: asking suppliers for quotes and proposals, comparing those offers using a standardized evaluation framework and then deciding which partner or partners should be awarded the business.
Sourcing enablement builds on the revolution in sales and marketing process automation technology (namely the recent application of analytics to Customer Relationship Management platforms), and delivers similar benefits to sourcing and supply chain teams.
Core Concepts of Sourcing Enablement
Opportunity Pipeline
By leveraging technology, sourcing teams can frame buying processes as value opportunities for a business’ bottom-line revenue, in much the same way that salespeople use a pipeline-based approach to drive growth in top-line revenue.
Opportunity Qualification
Qualifying an opportunity means matching every opportunity with the best process to use to get the most business value. For example, should Opportunity X be done as a simple “lowest price” RFQ or are there technical requirements that might suggest an RFI followed by an RFP? How many suppliers in the market can really meet the business need? Is there enough competition to support an aggressive savings target? By answering these questions in a visible and repeatable sourcing template, business teams can build a library of best practices.
Competing and Creating Friendly Competition
Truly great sourcing organizations understand that every supplier negotiation is about both competing and creating competition. Truly great suppliers do not need to partner with a business that they find challenging to deal with, and outdated business processes can increase your supplier’s costs of doing business with you. By measuring and managing your team’s competition for the best suppliers, you can also build processes that incentivize friendly competition for each and every significant business opportunity. Friendly competition means that your suppliers will never take your business for granted, but they also won’t feel as though they’re getting the short end of the bargain. Friendly competition is the basis of long-term partnerships, so that if any supplier doesn’t win a contract they feel twice as motivated to quote on your next opportunity.
Conclusion
Sourcing enablement is a huge opportunity for any business whose suppliers form a critical partner on the journey to revenue growth. By sharing some best practices and insights on this blog, we hope to provide useful insights to the sourcing industry’s growing community of practice. If you’re curious about Arkestro and want to try out our platform for free, here’s a link to sign up for your account: /bookademo/
