13 ways sustainable sourcing and procurement drive ESG efforts
The strategic sourcing process is a cycle, so it cannot be done once and forgotten about. A cycle approach to […]
Procurement 101
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5 minute read
Written by
Logan Price
The first step of strategic sourcing is identifying your business’s sourcing category or commodity. The best way to do this is with a spend analysis. By collecting the necessary data, sorting through it, analyzing it, and validating it, your procurement team will have
a better understanding of the particular sourcing category for your business, as well as the commodities within it. They will, therefore, be more equipped to make informed sourcing decisions for the betterment of your company.
As the first step of the strategic sourcing process, as outlined by AT Kearney, this step is a planning phase. So, it is important to gather as much information as possible. You will need to research and gather data on the following key areas in your company:
An effective way to gather this information is through a spend analysis.
Spend analysis is the practice of analyzing procurement spend data to improve supplier relationships, reduce costs, or increase efficiency. Spend data refers to the costs your business incurred for goods and services that have been acquired from external suppliers. It is important to remember that the terms ‘spend analytics’ and ‘spend analysis,’ while often used interchangeably, mean different things. You use the spend analytics to gain the necessary data needed to conduct a spend analysis. Simply put, spend analytics gives you the data you need, and spend analysis determines what you do with that data.
With a spend analysis, you need to ask the right questions in order to attain the most valuable information. You need to pull together your purchase history data and look at all angles of your business expenditure. Ask yourself the following questions which can help you review past performances and assess potential future performance and trends:
Using specialized software, you can simplify your spend analysis process. Digitizing this process can also be very beneficial for the accuracy and efficiency of your supply chain management and procurement processes as a whole. There are a few software solutions that focus solely on spend analysis, but it is recommended to invest in a more well-rounded solution such as procurement software. Procurement software can help take your entire procurement and sourcing process to the next level, rather than just focusing on one aspect.
This type of software can either be bought from a specialized software vendor or created specifically for the needs of your business. There are three types main types of procurement software:
Tradogram brings you the best features of all the above solutions in one simple package. You can establish full spend visibility with budget and project cost tracking tools, identify new ways to save with custom spend reports and analytics, and a lot more. Our software offers solutions for Purchase to Pay, Strategic Sourcing, Supplier Management, Contract Management, Spend Analysis, and Order Management. Plus, it has various integration options so you can use our software in conjunction with some of today's biggest ERP, accounting, and SSO platforms. Contact us today to find out more.
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