The term renaissance is one that is much over used but it is useful shorthand to describe how ideas, concepts and technology can have a ‘rebirth’ and develop into something not previously imagined. And in our sector it seems that Market Informed Sourcing is now having something of a rebirth of its own.
The phrase ‘Market Informed Sourcing’ was initially coined by Peter Smith of Spend Matters* to encompass the ‘advanced sourcing’ and ‘sourcing optimisation’ technologies that allow potential suppliers to be creative when making offers so, in effect, the market informs buyers of the most effective way of meeting their particular needs. This contrasts with the traditional approach of buyers pre-determining their requirements and asking the market to fulfil their needs. Why Market Informed Sourcing is so useful for buyers is that it means they can leverage any synergies, economies of scale and a host of additional factors that only become apparent during the sourcing process as suppliers reveal their strengths.
Market Informed Sourcing means buyers can leverage any synergies that only become apparent during the sourcing process as suppliers reveal their strengths.
Despite these benefits and despite these techniques being available for almost 15 years, the ‘sourcing industry’ as a whole has been slow to adopt the methodology. There are many reasons for this but it is largely due to accessibility and ease of use, the entry cost for buyers and also resistance to change in the buying community.
Back in 2000 huge computing power was not readily available. The internet was largely being used to display and share information and the concept of true cloud computing, where you can buy into services that give you extra processing and storage capabilities on demand seemed like a pipedream. Fast forward to the present day and storing and processing information in ‘the cloud’ is commonplace and as consumers all we want is our data to be secure and any online data processing to be fast and accurate. And if the price is right, we are happy to pay.
Overcoming individuals’ and organisations’ resistance to change is harder to achieve than improving hardware infrastructure but resistance to change does diminish over time. As with all new technology, once people see the benefits others are achieving and then experience these benefits themselves, the new ways of working seem less intimidating and start establishing themselves as the norm. This is the case with Market Informed Sourcing and thanks to the efforts of companies like ourselves and our competitors, organisations are starting to embrace the techniques and technology and uptake is steadily speeding up.
But as with all technology it never stands still so when a number of our customers start morphing Market Informed Sourcing into areas that go beyond its original definition we have a new concept – one that we call Beyond Sourcing®. And this is the true renaissance of Market Informed Sourcing as it has developed into something even more powerful to sourcing professionals.
Beyond Sourcing is the true renaissance of Market Informed Sourcing as it has developed into something even more powerful.
The early adopters of Market Informed Sourcing have already seized the low hanging fruit that it delivers and are now moving the same techniques in to other areas. Today’s leading edge buyer, or supply chain manager, (the roles are fast becoming interchangeable), is now looking up and down the length of their supply chain, looking for creativity from their suppliers and looking to optimize the whole of their supply chain in one exercise. They are less interested in theoretical network modelling with static data and they want to work with actuals in as near real time as is possible. They want to be able to place their whole supply chain on the market at the same time. They want to have a collaborative relationship with their suppliers and customers and they recognize the fact that every part of the supply chain, even those inside their own business needs to act as a customer to the people or functions it serves.
This approach has only become possible in the last couple of years as the tools and the power to use them have been developed on software platforms such as ours. Buyers and supply chain managers in sectors such as retail, automotive, and FMCG are all seeing and realizing the benefits of looking at their supply chains holistically and they have reduced their unit costs, improved quality, improved their customer service and have gained a wealth of knowledge about their supply chain. They have done this by simply recognizing that Market Informed Sourcing is not the end, it is the beginning and the renaissance has started once again as we move Beyond Sourcing.
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