MOST Analysis

Mission Statement

Most organizations rely on external technology providers for procuring the IT solutions the business needs. There are hundreds of technology providers in the market offering the same kind of solutions with the same features and deciding which product to choose or which vendor to go for can be quite a tedious task. That is where the sourcing strategies of the organization comes in handy. Strategic procurement or sourcing not only helps businesses gain a competitive advantage but also helps them manage third-party relationships and mitigate risks. Strategic sourcing provides a framework to make the sourcing of technology more efficient by laying clear guidelines for the planning, ordering, receiving, invoicing, and payment processes. Sourcing strategies are also meant to define how much the organization should spend on procurement. It should include market research to give a clear understanding of the supplier market and lay down well-defined guidelines for supplier selection. Thus, some of the key steps in building a sourcing strategy include: Assessing the company’s current spending on technology; Researching the supplier market; Picking up suitable suppliers for the project; Calculating the risks and costs involved; Negotiating with the chosen suppliers; Contracting the new suppliers; Reviewing and tracking to ensure desired output is achieved. Having a good sourcing strategy for the digital transformation program ensures that the spending on procurement is controlled, supplier relationships are maintained, and quality products and services are chosen. The sourcing strategy must be optimized by taking into consideration the different procurements inputs and comparing how they meet the company’s sourcing goals.

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Objectives

01. Sourcing Plan: departmental SWOT analysis; strategy research & development. Time Allocated: 1 Month
02. Building a Procurement Team: departmental SWOT analysis; strategy research & development. Time Allocated: 1 Month
03. Spend Analysis Part 1: departmental SWOT analysis; strategy research & development. Time Allocated: 1 Month
04. Spend Analysis Part 2: departmental SWOT analysis; strategy research & development. Time Allocated: 1 Month
05. Research Supplier Market: departmental SWOT analysis; strategy research & development. Time Allocated: 1 Month
06. Suitable Suppliers: departmental SWOT analysis; strategy research & development. Time Allocated: 1 Month
07. Calculating Costs: departmental SWOT analysis; strategy research & development. 1 Month
08. Calculating Risks: departmental SWOT analysis; strategy research & development. Time Allocated: 1 Month
09. Negotiate with Chosen Suppliers: departmental SWOT analysis; strategy research & development. Time Allocated: 1 Month
10. Contracting New Suppliers: departmental SWOT analysis; strategy research & development. Time Allocated: 1 Month
11. Competitive Advantage: departmental SWOT analysis; strategy research & development. Time Allocated: 1 Month
12. Review Supplier Performance: departmental SWOT analysis; strategy research & development. Time Allocated: 1 Month

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Strategies

01. Sourcing Plan: Each individual department head to undertake departmental SWOT analysis; strategy research & development.
02. Building a Procurement Team: Each individual department head to undertake departmental SWOT analysis; strategy research & development.
03. Spend Analysis Part 1: Each individual department head to undertake departmental SWOT analysis; strategy research & development.
04. Spend Analysis Part 2: Each individual department head to undertake departmental SWOT analysis; strategy research & development.
05. Research Supplier Market: Each individual department head to undertake departmental SWOT analysis; strategy research & development.
06. Suitable Suppliers: Each individual department head to undertake departmental SWOT analysis; strategy research & development.
07. Calculating Costs: Each individual department head to undertake departmental SWOT analysis; strategy research & development.
08. Calculating Risks: Each individual department head to undertake departmental SWOT analysis; strategy research & development.
09. Negotiate with Chosen Suppliers: Each individual department head to undertake departmental SWOT analysis; strategy research & development.
10. Contracting New Suppliers: Each individual department head to undertake departmental SWOT analysis; strategy research & development.
11. Competitive Advantage: Each individual department head to undertake departmental SWOT analysis; strategy research & development.
12. Review Supplier Performance: Each individual department head to undertake departmental SWOT analysis; strategy research & development.

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Tasks

01. Create a task on your calendar, to be completed within the next month, to analyze Sourcing Plan.
02. Create a task on your calendar, to be completed within the next month, to analyze Building a Procurement Team.
03. Create a task on your calendar, to be completed within the next month, to analyze Spend Analysis Part 1.
04. Create a task on your calendar, to be completed within the next month, to analyze Spend Analysis Part 2.
05. Create a task on your calendar, to be completed within the next month, to analyze Research Supplier Market.
06. Create a task on your calendar, to be completed within the next month, to analyze Suitable Suppliers.
07. Create a task on your calendar, to be completed within the next month, to analyze Calculating Costs.
08. Create a task on your calendar, to be completed within the next month, to analyze Calculating Risks.
09. Create a task on your calendar, to be completed within the next month, to analyze Negotiate with Chosen Suppliers.
10. Create a task on your calendar, to be completed within the next month, to analyze Contracting New Suppliers.
11. Create a task on your calendar, to be completed within the next month, to analyze Competitive Advantage.
12. Create a task on your calendar, to be completed within the next month, to analyze Review Supplier Performance.

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Introduction

Your IT sourcing initiatives need to be strategic in order to be effective. In order to do this, you must proactively explore your organizational needs based on a clear business case. In the past, contracts were frequently awarded to the lowest bidder. A single-sourced partner chosen based only on the lowest bid is less likely to satisfy an organization’s demands today. Collaboration relationships with IT vendors that provide genuine value are essential. What are the essential elements of efficient IT sourcing plans for keeping businesses ahead in quickly evolving markets?

Tactical Vs. Strategic Sourcing — What’s The Difference?

In an IT-driven era, the previous tactical sourcing strategy involved hiring an external vendor in response to a business need. Many government and business organizations still use these frameworks to obtain the cheapest product as soon as feasible because these models were often motivated to attain the lowest cost. Sometimes it still works, especially if you’re thinking about buying a material item like IT technology. But to define key technological alliances and accomplish corporate goals, digital transformation necessitates a comprehensive and strategic approach.

In order to characterize outsourcing as a cooperation loop, strategic sourcing is used. Strategic sourcing establishes baselines for the IT service and cost improvements required to achieve business strategies up front and sets business goals and objectives. A limited list of possible partners is then presented with business plans and IT baselines. Given the level of transparency that customers are demanding, this endeavor is imperative. Customers are scrutinizing corporate collaborations more and more for factors like environmental effect and investment pledges. Your vendor partnerships are crucial to both your business objectives and brand strategy.

Back end requirements for this project include a strategic, flexible governance program and an iterative method for assessing the vendor’s strategic fit. The iterative process of this ongoing evaluation is similar to Agile techniques, which repeatedly question “Is this right?” and “Does this work?” Strategic vendor outsourcing reflects the requirement for contemporary IT relationships in this way.

Key Components Of Strategic Sourcing

The following are some of the main advantages of strategic sourcing versus conventional tactical sourcing:

• Cost reductions over the long run as opposed to one-time “low bid” techniques.
• Business strategy coordination with sourcing partners.
• A higher chance of choosing the ideal partner each time.
• Long-term collaborations that result in beneficial connections.

What constitutes a strategic sourcing project, whether it be in the supply chain, IT, or another area of the company, bearing these objectives in mind?

• A thorough grasp of your present IT services and costs is necessary for cost management. As relationship complexities rise, it’s crucial to regularly monitor your present service and cost as businesses seek to maximize partner capabilities and investments. You can contact vendors for a better price based on a long-term relationship when combined with objective negotiating around a strategic, nontactical aim.

• To get the best solutions, risk reduction, and risk sharing, solution design involves a competitive, co-design strategy with possible providers. Solution design aims to reduce costs and enhance service delivery in relation to your strategic ambitions. With this strategy, it’s crucial to maintain in-house architectural and design capabilities so that you can collaborate with potential vendors to develop solutions that are suitable for your company.

• Adaptive governance is a method for overseeing numerous service providers and adjusting your connections over time as your organization changes. Partnership difficulties rise as businesses embrace more multi-cloud systems and look for redundant supply chain models, necessitating adaptive governance even more.

A long-term examination of your sourcing possibilities is necessary for the implementation of strategic sourcing. What procedures are required for vendor evaluation?

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How To Evaluate Your Sourcing Options

The objective approach and consistent evaluation procedure that are necessary for making strategic decisions about sourcing possibilities are frequently assisted by external resources. Your method should incorporate:

• A baseline for defining and assessing the costs and services offered today. Utilize the baseline to ascertain how relationships impact the broad strategic objectives of the department and the firm.

• Decide on the selection criteria that will guide the vendor relationship management procedure. Create a vendor service profile that includes objectives for diversity, equity, and inclusion as well as delivery criteria, governance requirements, and even environmental impact requirements.

• In an iterative process, investigate at the vendor(s) in order to start with a high-level solution design and make changes to the vendors and solution as you go.

• To comprehend outsourcing price models, you must compare vendor expenses to your starting point. Although this study is tailored to your particular circumstances, the benefit justifies the resource commitment required for thorough investigation.

• Develop employee buy-in for this new process. It could be necessary to make a conscious effort to include managers in the success of this new program due to interdepartmental politics. But stakeholder support is necessary for strategic sourcing to succeed.

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How to Change the Game with Strategic Sourcing

How can strategic sourcing be used to enhance the procurement process and produce better business results? In this workshop, we’ll talk about sourcing tactics as they relate to IT transformation and how strategic sourcing may provide your business a competitive edge. You’ll discover some important information below that can help you change the game in your company.

1. Industry 4.0 tools can make our work easier even while COVID-19 has made them harder.

Today, it is more important than ever to overcome spreadsheets’ data processing constraints in order to properly manage spending. To do this, one must analyze enormous datasets that were previously unfathomable in size, but this can be done with today’s tested, cutting-edge technology.

Think about the following questions:

• How might new tools help procurement teams work more efficiently?
• What functions do machine learning, robotic process automation, and AI serve?
• How can your procurement team manage higher spend with faster sourcing?

2. The scope of bid evaluation is constrained by manual work, which is also hampered by months-long procedures.

The issues with manual processes have long been known, but this turbulent year has made them worse. Burnout from manual labor results in a lack of information that prevents you from consistently making the best buying decisions.

One of the major advantages of business spend management (BSM) platform adoption and procurement transformation is that it expands your team’s bandwidth by giving them new tools that give actionable insights more quickly, effectively, affordably, and efficiently. As a result, you may address tail spend with your best-trained procurement staff.

3. Your procurement team can manage greater spend thanks to quicker sourcing.

Concentrate on increasing the capability of your top sourcing specialists by utilizing the efficiency benefits provided by contemporary strategic sourcing optimization techniques, generally through a Sourcing Center of Excellence (CoE). The CoE can source a bigger percentage of addressable expenditure thanks to the efficiency advantages from new technologies, and when your top people source with the finest tools, they uncover more savings and unlock more value.

4. With the appropriate tools, you can prevent analytics burnout and amp up deals 1,000 times.

With the help of the modern tools available today, you can 1,000-fold the impact of your offerings. Is this overstating the case? In no way. You would have 1,000 times more influence over bids if you could compare 100 times as many suppliers across 100 times as many cost factors. Not necessarily easy to implement, but rather straightforward to compute

5. Get past the constraints of manual procedures and spreadsheets.

Technology advancements currently outstrip certain organizations’ capacity for change. Organizations with agility clearly have a competitive edge. The firms that can swiftly and strategically evaluate massive datasets will stand out in their industries given the abundance of data accessible.

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The biggest issue of today’s procurement

The biggest challenge in procurement is coordination—coordination in the broadest sense of the word, both within the organization and among various supply chain and value chain participants.

There are many good reasons for organizations, regardless of the industry they operate in, to make procurement, especially digital procurement, a new strategic endeavor. All organizations—public administration, enterprises, non-profits, sports clubs, you name it—cannot afford to ignore the need of carefully managed, ethical procurement.

Operational inefficiency is frequently the result of procurement being dispersed across several departments within the same organizational structure. For instance, according to PwC’s digital procurement team, it happens frequently to discover orders that have been placed twice or to discover that the same invoice has been paid twice as a result of poor coordination.

In general, the necessity to handle procurement through a centralised operational model becomes more critical the more complicated the organizational structure is. The same is true for companies that offer a wide range of goods and services.

Organizations must be able to comprehend procurement holistically in order to better manage and even lower strategic risks, benefit from leverage effects, and cut costs.

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Advantages of a strategic sourcing strategy

The effectiveness of purchasing management is improved by strategic sourcing. More precisely, it lowers costs, strengthens supplier and vendor relationships, increases flow traceability, and boosts monitoring, audit, and reporting. With trackable operations records and more readily available indications, it enables a better professionalization of purchasing administration.

Purchase officers, for instance, have more negotiating power when they are specialized in a particular field and can ensure they are getting the best value for their money.

Additionally, both the organization as a whole and each department separately have ongoing access to spending evaluation. With this knowledge, it is simpler and more data-driven to change the organization’s policy, which helps to lower supply-related risks, incorporate social or environmental standards, or guarantee the integrity of suppliers through Know-Your-Supplier procedures.