Editor’s Note: Throughout the year, I will be welcoming submissions from Generation Next procurement professionals regarding a wide range of topics relating to our industry.
I think that this is important in that it not only provides the up and coming movers and shakers with an opportunity to express their opinions on the hot topics of the day, but also to create possible points of connection with the old guard and second career professionals. In the end, this will hopefully lead to a more complete and collaborative understanding of our world.
Today’s submission is from Heather Grossmuller, who is a Marketing Manager at Source One Management Services, and a Philadelphia Business Journal “People on the Move” Recognition Recipient.
Solely assuming you’re doing your best to uphold supplier relationships can land you in a rough place. Even if you are well-versed in procurement and can speak every language in existence, nurturing complex supplier relationships in a global spectrum requires frequent communication that often slips without a system to manage the contact. In a recent Supply Management post, Senior eSourcing Consultant Alun Morris looks into how this utility can boost supplier relationships and aid any organization aiming to collaborate with suppliers to enhance their core business. This blog explores the in’s and out’s of eSourcing, Morris’ perspective, and how to allow your supplier relationships to see the immediate advantages of this tool.
What’s The Real Deal with eSourcing?
eSourcing is an online means to manage the procurement life-cycle in a forum accessible to all parties. This tool defines requirements without the subjective viewpoint of one person relaying the specification. What does this mean for procurement? Initially, it presents a great deal of transparency in core procurement activity, allowing more successful engagements.
Beyond the essentials, companies are taking eSourcing a step further and understanding its role in diligent Supplier Relationship Management programs. Supplier Relationship Management (SRM) programs have recently presented overwhelming evidence that firms who invest in these outlets achieve a significant ROI.
In fact, according to a Strategic Sourceror blog post, companies considered to be on the leading edge of SRM best practices see an average of 20x return on investment versus those who overlook the importance of this strategy. Adopting the best SRM practices possible for your organization can yield a significant return. With eSourcing tools, this becomes increasingly feasible.
Management of Supplier Knowledge To Improve Business Relationships
When a supplier mentions a particular need, the professional managing the relationship usually doesn’t have trouble remembering their need to do business with that particular agreement in mind. If that person happens to move on from the company, without an e-sourcing solution there is little record of that need for the company to sustain business with the supplier’s obligations in mind. The knowledge has not been institutionalized.
According to a recent Supply Management article outlining Alun Morris’ perspective, “E-sourcing software can be used as an effective supplier communication tool, whether it be direct to one supplier or as a broadcast communication to multiple suppliers within your supply base. It also helps centralize information and ensure auditability of the sourcing process – communication is vital to effectively express your requirements and allow the supplier to respond – creating as much interaction between procurement professionals and their potential suppliers as possible.”
This utility is an asset for many reasons surrounding its essential functions. But the benefits of eSourcing technologies and improved supplier relationships is picking up a lot of attention as an asset outside of the realized core procurement process efficiencies.
Whisper Down the Lane Is Not Cutting It
To unify information and release data to multiple suppliers with a structured delivery, eSourcing tools provide a framework and clarity that benefit both sides of the relationship. Aside from data delivery and negotiation, supplier relationships should be about regular communication. A collaborative supplier relationship can be identified through an eSourcing tool after contracts and proposals have been worked out—however by standardizing this communication, the complexities of relationship management can be conquered.
eSourcing tools provide a road to facilitate regular conversations and a partnership that has the potential to enhance business performance drastically. To deliver value beyond simply cost savings, a supplier-based approach is key to an organization’s improvement. With eSourcing tools, organizations can find themselves one step closer to this objective.
About the Author
Heather Grossmuller is a Marketing Manager at Source One Management Services, LLC, a Philadelphia Business Journal “People on the Move” Recognition Recipient, an advisory board representative of La Salle University’s Association of Women MBAs, and all-around marketing enthusiast. As Marketing Manager, she oversees Source One’s efforts in internal/external communications ranging from social media management to recruitment.
30
Procurement Insights 
Sigi Osagie
February 27, 2015
You make many excellent points, Heather, which readers should find valuable.
You sound like you ‘get it’!
As you infer, e-sourcing is a means to an end. Unfortunately, still far too many people (senior executives and, sadly, some Procurement folks included) don’t yet get it. They’re caught in a mindset or thinking pattern that perceives e-sourcing as the end-goal.
The more we can disseminate knowledge, for example through articles like yours, to educate folks that e-sourcing is simply one of an arsenal of tools / methodologies for the purchasing job, the better for all.
But, like all tools, e-sourcing can be used badly or properly. Quite often the tool itself is blamed and given a bad name when its utilisation is flawed, or when the users / decision-makers involved don’t really understand how to leverage it properly.
I think it’s vital to continuously remind ourselves that the end-goal is for Procurement to play its true role in the enterprise – which is to harness the power of supply markets for enterprise success and competitive advantage, in an effective, safe, ethical and cost-efficient manner. E-sourcing is one of modern tools Procurement functions can adopt to enable that in the appropriate contexts.
Sigi Osagie
Author, “Procurement Mojo – Strengthening the Function and Raising Its Profile”
(Visit http://www.procurementmojo.com to learn more.)
piblogger
February 27, 2015
Thank you for your insights Sigi. They are as usual interesting and definitely worth thinking about.
Let me ask you this question, is the perception pertaining to the role of E-sourcing generational. Specifically, is there a difference in the way old pros view E-sourcing as compared to the 30 Under 30 group?
Sigi Osagie
March 1, 2015
Thanks for the compliment, Jon.
The ‘generational’ angle is an interesting observation on your part. I’m not so sure how big an impact this factor is, but I suspect it could be a contributory factor.
On one hand, the younger generation of Procurement professionals, who’ve started their careers in a world immersed in technology, are more likely to embrace e- applications of any sort, be that sourcing or anything else. (Some of these folks were born with Game Boys in their hands!)
Yet, in my experience of building and revamping Procurement functions, these folks are often not yet senior enough in job positions to call the shots on whether or not to adopt e-sourcing. I suspect you’ll find a very tiny minority of senior level Procurement executives / decision-makers worldwide who are under 30.
Does this necessarily mean the older guys are less open to technology enablement like e-sourcing?
I don’t think so.
Although e-sourcing as a particular technology application is still relatively new (compared to, say, ERP or MRPII), most older Procurement professionals started their careers when technology applications in other supply management areas were already proliferated, e.g., MRP, MRPII, ERP, product data management (PDM), electronic vendor schedules, etc.
I suspect the true underlying issues pertaining to the perception of e-sourcing lie in people’s thinking patterns, influenced by their limited understanding. That’s why I believe dispersion of knowledge (e.g., through social media and articles like Heather’s) and benchmarking are excellent ways of expanding people’s understanding and thinking.
In truth, many new technology applications or work methodologies often go through the ‘growth curve’ that e-sourcing is experiencing. The ‘laggards’ – those who grasp the nettle late – often form the majority at some stage!
I suspect that as the younger, more tech-savvy generation climb up the ranks and get into executive / decision-making job roles, e-sourcing adoption and other Procurement technology applications will see phenomenal growth.
Sigi Osagie
Author, “Procurement Mojo – Strengthening the Function and Raising Its Profile”
(Visit http://www.procurementmojo.com to learn more.)
piblogger
March 2, 2015
In terms of generational influence in terms of technology and change, I often think back to AutoCAD’s emergence as a ubiquitous solution.
In the company’s early years, it made a decision to provide it’s CAD solution to University’s as a teaching tool free of charge/or for a minimal fee. This meant that the up and coming generation all learned their profession using AutoCAD, so that when they entered the workforce they brought their knowledge and expertise with the application with them.
Needless to say, one does not have to guess which application the company for which they worked chose to purchase.
I wonder if an AutoCAD-like technological influence in the procurement world is possible?
Sigi Osagie
March 2, 2015
Very interesting and appropriate historical example, Jon.
Perhaps there’s some learning point therein for current e-sourcing application providers!