The other element of the sourcing process that seems to be neglected – again, by almost two-thirds (64.4%) of our survey organisations – is a thorough analysis of spend. As we have argued earlier in this report, spend analysis should be the precursor of any sourcing activity, since it highlights buying behaviours, the main requisitioners, purchases made outside of the existing contracts and opportunities for cost savings. Market research Market research is the top activity that is included in the majority of the respondents’ sourcing processes. Market intelligence is very important as it informs sourcing decisions and highlights opportunities that can be explored. Market intelligence focuses on category research (e.g. market trends, the macroeconomic environment, the industry dynamics, the risk profile) and supplier research (e.g. financial health, inherent risks, product / service capabilities). In the vast majority of organisations (90.8%) procurement undertakes this market research. However, 19.5% of respondents assign this task to an internal function and 13.8% to a third-party organisation.
Figure 46: WHICH OF THE FOLLOWING APPROACHES DO YOU USE TO RESEARCH THE MARKET TRENDS AND SUPPLIERS DURING A SOURCING PROCESS?
Procurement conducts the research An internal function conducts the research A third-party organisation conducts the research No external research is conducted during a sourcing process
90.8%
19.5%
13.8%
4.6%
Other
2.3%
0
10%
20% 30%
40%
50%
60%
70%
80%
90%
100%
eSourcing eSourcing is a faster, more transparent and fairer way of facilitating tenders and conducting negotiations with suppliers. It is a suite of collaborative, web-based tools that enable procurement professionals and suppliers to conduct activities within the procurement lifecycle over the internet. eSourcing can also include eAuctions, where appropriate. These activities include requirements and specification definition, tendering and supplier selection, and contract award and management. eSourcing ensures smooth and clear communication, and it can bring both financial and non-financial benefits. eSourcing appears to be the least popular consideration during a sourcing process. Only one in four respondents discusses the application of eSourcing during their sourcing process. And the majority of organisations (51.7%) have not used eSourcing in the past.
Figure 47: HAVE YOU USED ESOURCING OR EAUCTIONS?
Don’t know Yes No
51.7%
47.1%
1.1%
0
10%
20%
30%
40%
50%
60%
Additionally, about one-third (34.1%) of the organisations believe that eSourcing is not appropriate and 19.3% do not know if eSourcing is appropriate for their needs or not. This suggests that there is a need to educate procurement professionals on the eSourcing process and benefits.
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