The road to a best practice sourcing and procurement function can be long and complex. Our Strategic Assessment gives access to senior practitioners who can shine a light on the way forward.
We take a pragmatic approach to analyzing the sourcing and procurement functions of a customer on both a qualitative and quantitative basis. The result? Not only an accurate assessment of the current state but also a roadmap to a ‘best-in-class’ future state. A full strategic assessment is based on three key inputs from the customer: 12 months spend data, such as GL, AP, Corporate Card, PCard Travel Data; existing contracts as available; and meetings with category managers and key stakeholders from across the business.
We focus on enterprise engagement, spend visibility, sourcing maturity, contract compliance and technology utilization. Following a strategic assessment, we will deliver a number of outputs, including:
- Spend Analytics, which give the customer visibility of spend data by business unit, category and geography as well as supplier fragmentation analysis and review.
- ‘Procurement Mapping’, a coherent and highly visual map which combines the quantitative output from spend analytics with the qualitative output from our stakeholder meetings.
- An overall maturity ranking of the sourcing and procurement function.
- The identification of opportunities by category and sub-category.
- Team competency and ‘voice of the customer’ assessment.
- A proposal for how the operation could be best structured in order to deliver maximum value.
Feedback from Xchanging customers demonstrate that the strategic assessments add real value to businesses and generate renewed impetus to procurement teams.
The end-to-end sourcing and procurement offering begins with successful spend analytics.
Xchanging’s spend analytics tool cleanses, normalizes, classifies and categorizes customer spend data from a variety of sources that has been obtained through integration with disparate systems. This tool achieves classification levels over 95% and over 95% accuracy on the classified data.
During the discovery phase of every engagement, Xchanging will create a ‘Procurement Map’. This is a combination of the quantitative output from spend analytics and qualitative data from a series of shaping meetings we will hold with stakeholders across the customer’s business. The qualitative element focuses on enterprise engagement, spend visibility, sourcing maturity, contract compliance and technology utilization.
The complete Procurement Map provides the customer a ‘window’ into their spend and how it is managed. This is consistently seen as adding value by our customers.
Throughout an engagement, we will implement a system to regularly refresh spend. This will constantly improve spend visibility, allowing us to better manage compliance to negotiated contracts and continually identify incremental savings opportunities.
A team of sourcing professionals with fingers on the pulse of industry.
In each of the categories of indirect spend that we manage for our customers, we have experts who are constantly speaking with suppliers, engaging third-party advisors, talking to industry advisors and interacting with the sourcing community.
This is our mindset toward market intelligence, but we cannot rely solely on the knowledge of our people. We have a robust framework and process in place to support our team in generating benchmarks and market research. This draws from both internal and external data sources.
Internally, Xchanging has a database of suppliers from an extensive sourcing history, allowing us to cross-reference suppliers with bidding activity from past sourcing projects, and a wealth of category expertise that we continually collate reference materials and data from.
Externally, we partner with the global provider Dun & Bradstreet for credit reports and use this to identify ‘at risk’ suppliers. We also have access to a range of company research, price benchmarking and market trend services from providers such as Everest Group, IBISWorld, The Hackett Group, Gartner and Forrester, along with access through BravoSolution to a supplier network, which allows the Co-Sourcing team to deepen their knowledge of benchmarks and the supplier markets.
At Xchanging, we appreciate that sourcing and procurement success is built on solid foundations of strong communication, good understanding and expert planning.
Through spend analytics, our shaping process and category planning sessions, we ensure that we fully understand our customer's business drivers and future landscape before formulating a sourcing strategy that will deliver the agreed goals. We do not do this in isolation; this is a collaborative approach that we carry out alongside our customer.
On a macro-level, we take a holistic approach to category planning, creating ‘Category Playbooks’. The playbook will lay out the roadmap to success at a category or sub-category level, including a supplier landscape profile, category objectives, business drivers, key stakeholders, financial indicators, benchmark information and a three-year sourcing wave plan.
On a micro-level, we create a ‘Project Charter’ for every sourcing initiative. This charter captures all important information pertinent to that initiative, such as project timeline, success criteria, obstacles, risks and mitigations, financial impact, key stakeholders and links to other projects.
Xchanging’s approach to sourcing strategy is truly transparent, meaning our customers are confident that we do not ‘cherry-pick’ lucrative sourcing projects but approach each category in a way that strives to manage 100% of the spend, 100% of the time.
Technology-enabled sourcing excellence
As with everything in the world today, technology is crucial to best practice sourcing and procurement. Sourcing methodologies have been greatly enhanced in the last decade by developments in sourcing and procurement technology such as in the areas of spend analytics, contract and supplier management, spot-buy and tail-end spend management, savings tracking and more; but the most fundamental impact has been in the area of eSourcing technology.
The challenge for an organization hoping to utilize such tools is the need for capital investment in software licensing, maintenance, support and training costs. At Xchanging, we have already invested in the technology, meaning our customers don’t have to. As is the trend with many technologies and business processes, this technology can be consumed as a service – reducing risk and improving cash flow.
But it is not all about the technology; technology is merely an enabler.
We have the expert leadership, deep sourcing knowledge, wealth of negotiation and contracting experience and effective RFx composition that is required to run an effective sourcing project. Our customer may only run a couple of sourcing initiatives each year, their time being consumed by reacting to ad hoc requests, managing supplier issues and engaging internal stakeholders.
The contrast at Xchanging is stark; sourcing is our core business. We know:
- How to position an opportunity with suppliers
- How to construct an RFP that will extract the most value
- When to push suppliers and when not to
- How to assess suppliers’ capabilities
- The type of SLAs that should be built into a contract
In September 2013 Xchanging acquired MarketMaker4 (MM4), an e-Sourcing technology company. MM4 brings to Xchanging’s Procurement business a proprietary Software-as-a-Service technology platform providing industry-agnostic procurement e-Sourcing, business intelligence and dedicated customer support (MarketMaking1). The acquisition expands the breadth of procurement services Xchanging offers, as well as contributing to the company’s technology-enablement strategy.
MM4 will continue to be marketed under the same name in order to leverage its well-established position in the e-Sourcing market. This will support Xchanging’s strategic global growth strategy by extending its presence in the USA, a region which has significant growth opportunities for the procurement business, whilst also creating business development opportunities for Xchanging’s existing procurement products and services.
For more information on MM4 please visit www.mm4.com