Sourcing is a key part of the procurement process and involves identifying and evaluating potential suppliers and selecting the most suitable ones to meet the organization's needs. Procurement, on the other hand, is primarily concerned with acquiring those goods and services. Procurement involves placing orders and managing the delivery and payment of goods and services.
Sourcing must be strategic to reap the benefits of procurement. By conducting a thorough analysis of the organization's needs and researching potential suppliers, organizations can ensure that they are sourcing high-quality products and services that meet their requirements. Likewise, they can differentiate themselves from their competitors and gain a competitive edge in their market.
What Is Strategic Sourcing Software?
Strategic sourcing software is software that helps organizations manage the process of sourcing goods and services from suppliers. It typically includes tools for conducting market research, identifying potential suppliers, negotiating contracts, and managing the performance of suppliers.
Some strategic sourcing software systems may also include features for managing the procurement process, such as creating and issuing purchase orders, tracking deliveries, and managing invoices and payments.
Strategic sourcing software can help organizations to streamline their sourcing and procurement processes, reduce costs, and improve the quality of the goods and services they purchase. It can also help ensure that organizations comply with relevant laws and regulations, such as those related to public procurement.
The Benefits of Strategic Sourcing Software
There are several benefits to using strategic sourcing software for managing the sourcing and procurement processes:
Cost savings: Organizations may pay more for their goods and services without the tools to identify the most suitable suppliers and negotiate favorable terms. Strategic sourcing reduces procurement costs by identifying the most suitable suppliers. With a thorough understanding of the suppliers’ offerings and past performance, organizations can negotiate better terms by leveraging the extensive information gathered by strategic sourcing software.
Improved quality: Without the ability to thoroughly research potential suppliers and ensure that they meet the organization's requirements, the quality of the goods and services purchased may suffer. Strategic sourcing software can help organizations to ensure that they are sourcing high-quality goods and services that meet their requirements. Organizations can establish performance benchmarks with suppliers to ensure they meet the required quality standards and deliver goods and services on time.
Increased efficiency: Organizations often rely on manual processes for sourcing goods and services, which can be time-consuming and error-prone. Strategic sourcing software can help organizations increase their efficiency and productivity by automating and streamlining the sourcing and procurement process. This reduces the time and effort required to research and select suppliers.
Improved Supplier Performance: Strategic sourcing software can help organizations monitor their suppliers' performance and ensure that they meet the agreed-upon terms and conditions. Organizations can use various tools, such as supplier scorecards and performance evaluations, to monitor the performance of their suppliers and ensure that they are meeting their obligations.
Compliance: There are many internal and external laws that an organization may have to adhere to when running its operations. Since suppliers become a part of your supply chain when you source products or services from them, they must be compliant as well. In case of non-compliance, your organization is prone to suffer many risks, including reputational damages. Strategic sourcing software can help organizations to ensure compliance with relevant laws and regulations, such as those related to public procurement.
Features of Strategic Sourcing Software
Strategic sourcing software typically includes a range of features to help organizations manage the process of sourcing goods and services from suppliers. Some common features of procurement sourcing software include:
Market ResearchThis feature can conduct market research and identify potential suppliers, including industry directories, trade show listings, and company profiles.
Analyze your current procurement process
You can manage the performance and relationship with suppliers, including supplier scorecards, performance evaluations, and communication tools..
This includes creating and managing contracts with suppliers, including negotiation support and contract templates
Request for Proposal (RFP) generation:
You can easily create and issue RFPs within a few minutes to solicit proposals from potential suppliers.
Analyze and track the organization's spending on goods and services, including setting budgets, creating reports, and identifying cost-saving opportunities.
Manage the procurement process, including the creation and issuance of purchase orders, tracking of deliveries, and management of invoices and payments.
How to Select Strategic Sourcing Software
When selecting strategic sourcing software, organizations need to consider the following factors:
Requirements: It is essential to identify the specific needs and requirements of the organization and ensure that the software meets these needs. This may include considering the types of goods and services the organization sources, the number of suppliers, and the volume of purchases.
Functionality: Test the software's functionality and ensure that it includes the tools and features needed to manage the sourcing and procurement process. Many strategic software service providers offer a free demo or trial version, which you can avail to ensure it has all the needed functionalities.
Integration: Consider how the software will integrate with other systems and processes within the organization, such as the enterprise resource planning (ERP) system and the accounts payable process.
Scalability: Organizations should consider the scalability of the software and ensure that it can accommodate future growth and changes in the organization's needs.
Cost: Organizations should consider the total cost of the software, including any upfront costs, subscription fees, and maintenance costs.
User Experience: It is crucial to consider the user experience of the software and ensure that it is easy to use and intuitive for the individuals who will be using it.
By considering these factors, organizations can select strategic sourcing software that meets their specific needs and helps them to optimize their procurement processes.
Top 5 Strategic Sourcing Software in 2023
If you are looking for strategic sourcing software to streamline your procurement process, here are the top 5 best strategic sourcing software for you to consider:
Kissflow Procurement Cloud
Kissflow Procurement Cloud is a flexible procurement sourcing software suite used by businesses of all sizes to streamline their procurement processes, including sourcing, invoice processing, and supplier management. It can be used with other finance and accounting tools, budget management platforms, and ERP interfaces.
Kissflow Procurement Cloud is subscription-based and priced on a case-by-case basis, considering the number of users, platform functionalities, and expected transaction volume. It is commonly used by medium to large enterprises looking to move to a unified procurement cloud.
Kissflow Procurement Cloud integrates with other third-party applications such as Quickbooks, Xero, and Freshbooks and also offers an API for integration with other software.
SAP Ariba Sourcing Suite
SAP Ariba is a strategic sourcing software that helps businesses manage their procurement projects and events for materials. It allows for automated project initiation through the use of purchase requisitions from various back-end systems. It offers a single platform for comparing and evaluating supplier responses and awarding the business.
The software includes automated negotiation processes, compliance support through configurable workflows and approved supplier lists, and access to material masters for creating documents like contracts and purchase orders that comply with sourcing terms and conditions. It also has features for managing preferred supplier lists, collaborating with suppliers through multiple currencies and portals, and directly accessing material masters.
JAGGAER Advantage (Legacy)
JAGGAER is a software platform that allows companies to manage direct and indirect spending through one solution. The platform is designed to be industry-specific and has deep functionality in specific sectors. It can be integrated with various enterprise resource planning (ERP) systems and has a strong network of suppliers available to provide support.
JAGGAER is a software-as-a-service (SaaS) solution that is always on the latest release and has access to the latest developments in guided buying and artificial intelligence.
Coupa BSM Platform
Coupa Sourcing is a sourcing software tool that helps businesses maximize their resources through the use of templates and group sourcing programs. It allows for real-time visibility of spending and alerts for new sourcing opportunities, making it easier to target tail spend and maintain a 100 percent compliant process.
Coupa Sourcing can immediately push bid results into contracting and purchasing and automatically validate invoices for value capture, helping businesses realize value quickly.
Workday Strategic Sourcing
Workday strategic sourcing software helps streamline the source-to-contract process and improve purchasing efficiency. It offers various capabilities, including sourcing project intake, pipeline management, RFx, reverse auctions, contract management, supplier onboarding and performance management, dynamic negotiations, and reporting and savings tracking.
The software helps end-users follow a clear and compliant path for every purchase and enables them to negotiate better deals through real-time data and analysis. It also allows for creating and collaborating on contracts using templates, integration with Microsoft Word, and document signing platforms like DocuSign and Adobe Acrobat Sign.
A comprehensive procurement system should have several key features to function effectively, including conducting market research, automating your RFP processes, cloud storage for receipts and documents, budgeting capabilities, performance ratings, and a vendor management system. Procurement software with these features can help your sourcing and procurement teams work together more efficiently, reduce decision-making cycle times, provide greater visibility into your data, and offer opportunities for cost savings.
Kissflow Procurement Cloud is a comprehensive and user-friendly sourcing software that includes all of these features and more, allowing businesses to manage all of their procurement and sourcing in one place, collaborate digitally, and securely store data on the cloud. If you need a procurement and sourcing solution that's easy to use and powerful enough to replace your spreadsheet and form systems, consider giving Kissflow Procurement Cloud a try.