STRATEGIC SOURCING

Strategic Sourcing is a method of managing procurement processes for an organization in which the procedures, methods, and sources are constantly re-evaluated to optimize value to the organization. Strategic sourcing, which is considered a key aspect of supply chain management, involves elements such as examination of purchasing budgets, the landscape of the supply market, negotiation with suppliers, and periodic assessments of supply transactions.

STRATEGIC E-SOURCING

Strategic E-Sourcing is the process of obtaining bids from different suppliers via a single online portal. The benefits of E-Sourcing include streamlining the sourcing process, reducing prices by maximizing supplier competition, and creating a repository for sourcing information.

E-Sourcing encompasses the entire purchasing process from inviting potential suppliers to tender, requesting, and collecting supplier information, bid management process, and/or holding eAuctions, analysis of responses, and finally, awarding suppliers with a contract and managing the deal to completion.

SOURCING and BLOCKCHAIN

The term blockchain is most often used to describe a ledger technology, not a specific product or solution. However, there are various blockchains that come in public, permissioned or private versions. Today, there are dozens of different protocols, considered as blockchains and can be classified as distributed ledger technologies. There are four types of blockchain structures: Public Blockchains, Private (or Managed) Blockchains, Consortium Blockchains, and Hybrid Blockchains. A sample of blockchain competitors are Bitcoin, Ethereum, Corda from R3, Fabric from IBM, Ripple, QTUM, Cardano, Polkadot, Cosmos, and EOS.

At its core, blockchain relies on a decentralized, digitalized, and distributed ledger model. By its nature, this is more robust and secure than the proprietary, centralized models which are currently used in the trade ecosystem. According to Investopedia: “A distributed ledger is a database that is consensually shared and synchronized across multiple sites, institutions, or geographies, accessible by multiple people.”

From a standpoint of security and being able to track multiple variables, blockchain will assist organizations to better prepare and manage complex decision-making processes to lower costs and improve performance. A plan of action will greatly benefit companies by initiating projects that will integrate blockchain solutions with existing platforms and practices thus, a strategic plan to prepare for what is to come.

Sourcing and Supply Chain Management using Blockchain

Companies continue to experiment with new ways of applying blockchain to the supply chain. One way is to create Non-Fungible Tokens (NFTs) that allow for batch traceability and ownership of products. Blockchain is also being deployed for location tracking, with capability for storing immutable records of transactions as well as linking to changeable data that resides off-chain.

Creation of NFTs to manage traceability within the supply chain will allow companies to know who is responsible for goods at any given time. In addition, NFT tokens make it possible for companies to remove counterfeits and trace assets along the supply chain.

Sourcing and Blockchain – Sample Projects

      • FedEx has integrated the blockchain into its chain of custody to improve traceability and provide a trustworthy record, helping to address customer disputes.
      • DeBeers is using the blockchain’s tracking technology to monitor the source and progress of every single natural diamond they mine by using the Tracr TM
      • Walmart use of blockchain by piloting multiple programs powered by Hyperledger Fabric by tracing the origins of fruit and meats sold in various markets.
      • Louis Vuitton use of NFTs to authenticate high-end product line.
      • IBM’s collaboration with IPwe, an IP ecosystem platform. IBM will tokenize patents, which can then allow patent owners to commercialize their patents in an open, safe, and accessible trading environment.
      • IBM’s Food Trust, which global food chain giants such as Walmart, Nestle, Unilever, and Carrefour have all signed up for. IBM has its own blockchain platform, a public cloud service that can be used to build different blockchain networks. It is based on Hyperledger Fabric, an open-source collaborative blockchain project hosted by the Linux Foundation.
      • Koinearth developed marketsN, which implements NFTs for enterprises and supply chains. Benefits include better market visibility, trading of illiquid assets, and ownership transparency.
      • A real-estate startup Propy has already commenced operations using NFTs for real-estate transactions.
      • VeChain and the Republic of San Marino use of NFT COVID-19 vaccination passports. The tokens will help authenticate the documents and reduce counterfeits.

Strategic Sourcing Software

According to G2, a software marketplace, products within the Strategic Sourcing category support the work performed by procurement teams when planning for assessment and performance management initiatives. The functional capabilities typically included by Strategic Sourcing applications include project management, category management, savings tracking, data collection, team collaboration, and a supplier marketplace.

G2 Strategic Sourcing lists 90 software platforms and the Top 15 Strategic E-Sourcing Software tools are as follow:

      1. Precoro
      2. RFP360
      3. SAP Fieldglass
      4. Procol
      5. BuyerQuest
      6. SAP Ariba
      7. PRM360
      8. Anvyl
      9. Jaggaer
      10. Workday Strategic Sourcing
      11. Procurify
      12. ProcurePort
      13. Coupa Procurement
      14. aPriori Digital Manufacturing Simulation Software
      15. Basware

Benefits of Strategic E-Sourcing Tools

E-Sourcing has become a key procurement tool for companies. Jonathan Groda, a blogger posted an excellent post titled Benefits of E-Sourcing Tools: Centralization. He outlines the following:

      • Reduced Customer Acquisition Costs (CAC)
      • Increased transparency in purchasing process
      • Levels the playing field for all suppliers
      • Preparation and maintenance of Bid Packages made easier using RFP/RFQ documents
      • Vendor List maintenance
      • Responding to Vendor Queries made easier
      • Bid Responses
      • Management of Contracts

RREVENU can assist in a variety of service offerings that are related to sourcing and supply chain management. Here, we have covered the concept and a sample of what is to come with the integration of blockchain technology with sourcing and supply chain management. In accordance, the following list provides a sample of projects that we are able to assist clients:

      • Create and evaluate RFPs to assist companies through the entire RFx process.
      • Support a supplier diversity program in accordance with client and company requirements to establish a Tier Structure of vendor utilization based on negotiated discount rates.
      • Develop and execute sourcing strategies, negotiate, and administer of contracts.
      • Identify, develop, and drive best-practice supplier management, procurement, and category management practices.
      • Develop strong collaborative relationships with key stakeholders to include Procurement Finance, Operations, Accounts Payable, and Legal teams to strategically manage spend.
      • Analyze spend and business data, internal requirements, and external supply markets, to develop strategic sourcing strategies and plans aligned with the company’s business goals
      • Assist with complex sourcing projects and lead contract negotiations that will optimize value and revenue to the company.
      • Use unique team subject matter expertise and leadership experiences to develop effective eAuction strategies by utilizing strategic creative thinking, negotiation best practices, and industry and technology knowledge.
      • Work with stakeholders to identify, manage, and evolve relevant Business Intelligent (BI) dashboards which provide real time performance / KPI optimization capability and create visibility of systemic performance gaps / root causes

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