Outdated processes and disconnected technology have long presented barriers to supply chain forecasting and sourcing. But sourcing and financial planning and analysis (FP&A) teams are increasingly adopting cloud-based tools that bring them real-time data analysis to support better business decisions and greater growth.
Teams with access to aggregated data and automation tools understand their market better than ever before, driving better results across a range of business drivers, including improved headcount management, reduced demand, more streamlined project requests, and tighter inventory control.
Overcoming barriers to Collaboration
Sourcing and FP&A teams using legacy software often work in silos, trapping data and insights, giving both teams and their organization an incomplete picture of the spend under management. . The lack of data prevents management from accurately tracking costs and forecasting costs, increasing the risks of supply chain shortages or excesses and the procurement of unnecessary services.
Lack of visibility into planned spending initiatives increases the time and cost to improve spending under management, according to a new Harvard Business Review Analytic Services research report, “Optimizing the Supply Chain by Aligning Planning and Sourcing Functions.”
This disconnect among teams makes it difficult to predict spending. Supply chain disruptions only add to the budget pressures of organizations struggling from the effects of the pandemic, geopolitical volatility, and rising inflation. Sixty-four percent of the 536 financial planning and procurement executives surveyed in the HBR report said their organization’s purchasing costs for goods and services were over budget in their most recent that fiscal year.
“Planning and procurement are often done by very different people using very different data,” he said Chris Caplice, executive director of the Massachusetts Institute of Technology (MIT) Center for Transportation and Logistics. “The planning culture is more analytical. Sourcing is more focused on execution.”
Enabling real-time collaboration between sourcing and FP&A teams can help alleviate much of the pressure these teams feel.
Aligning Workflow Technology
When sourcing and FP&A supply chain teams are aligned with business goals, they can help ensure stability as they navigate uncertainty. Shared data empowers planning teams to create accurate budgets and forecasts that reflect changing market conditions. At the same time, access to real-time savings information can help managers reallocate resources to existing projects, start new projects, or reserve funds for the future.
Increasing collaboration between sourcing and FP&A teams also allows for proactive budget planning that reflects their shared information. Connected and collaborative search can result in better decision making by eliminating communication silos, providing real-time access to data, and strengthening cross-functional relationships.
“The most progressive executives I know see exactly this issue of collaboration between planning and sourcing,” said the consultant. Harold Good, president and CEO of Procurement Pros Group. “They’re asking how their planning and search functions talk to each other, and how they can make sure everyone has access to the same relevant data.”
Strategic sourcing technology gives organizations the ability to combine data with other savings drivers from across the business, enabling optimization of cost factors such as logistics and inventory. This capability facilitates better decision making and tighter coordination of materials, capacity, and personnel.
Real-Time Insights, Better Decisions
Business investment in technology enables the implementation of strategic sourcing solutions quickly—and with fast potential return on investment (ROI). The key to ensuring ROI is software that helps sourcing teams better analyze value, negotiate, and use actionable data based on real-time market conditions.
Sharp Healthcare in San Diego needed to consolidate and streamline a vast hodgepodge of inefficient supply chain management solutions, legacy manual processes, and three contracting systems.
By migrating to a stronger strategic sourcing platform, Sharp dramatically improved the supply chain team’s ability to collaborate and share information. The updated software and processes saved the company $4.2 million after six months of service.
“Since our first day, we’ve gained significant value from greater engagement with our stakeholders—including suppliers—in addition to cleaner data and easier, real-time reporting from a single source,” said Ryan Koos, chief supply chain officer of Sharp.
In addition to cloud-native software, organizations interested in the most advanced technology should take advantage of the power of machine learning (ML). Intuitive dashboards and reporting can offer visibility into spending and tracking projects across an organization, helping teams prioritize projects to better measure their business impact and track progress toward goals. business goals.
Strategic sourcing software features help businesses connect business supply chain applications, ensure data integrity, and facilitate collaboration, improving stakeholder and supplier engagement and resulting in higher efficiency and cost savings. that cost.
“You want to be lean while being active,” he said Chad Autry, professor of supply chain management at the University of Tennessee. “Most companies can’t be both, but there are a few that can, and they’re actually smoking the competition.”
For more detailed insights into the benefits of strategic search and collaboration technology, download the HBR–Analytic Services research report “Optimizing the Supply Chain by Aligning Planning and Sourcing Functions.”
