Nowadays various studies about best practices in procurement and sourcing automation are regularly conducted worldwide. The effectiveness of the implemented procurement and sourcing automation systems is being constantly monitored, and their overall impact on the company’s purchasing performance is analyzed.
Development of the company’s own sourcing platform expands the capabilities of the company’s procurement/sourcing team which is used to conduct the sourcing activities on third-party websites but wants more.
This article lists the key reasons why the company should develop its own sourcing platform instead of just utilizing third-party websites.
Increase the savings
It is clear that conducting the sourcing activities electronically eliminates the time wasted on running all these activities manually. Also, the utilization of a convenient sourcing platform enables the purchasers to get items of a given quality at the best possible terms. However, running the sourcing activities electronically also requires investments.
Each company pays a certain amount for conducting the sourcing activities on the third-party website. In addition, typically the companies pay for a third-party operator to run the sourcing activities on the third-party website.
Overall the cost of developing its own platform and the costs of operating its own system do not exceed the cost of running the sourcing activities on the third-party website.
If the company does not possess sufficient resources to hire programmers to develop its own system from scratch, the managers may consider the implementation of SaaS solutions. Such solutions provide an easily accessible customized workspace to run sourcing activities. To utilize it you just need internet access and a browser. Such solutions possess low implementation costs. With a minimum implementation cost, a customer with a relatively large volume of purchases returns the investment in just a few months.
Enhancing the data security
It is critically important for the users to be sure that their data on the platform is protected, and that any unauthorized access to this data is impossible. It is much easier to secure it through your own assets rather than to guarantee any security on a third-party website.
The issue of data security is especially critical when it comes to integrating the platform with the company’s internal systems such as ERPs, accounting software, a supplier relationship management (SRM) system, or any other relevant databases.
Today, quite often companies are trying to split their procurement activities into the front office and back office to avoid mixing the internal processes with the external ones. In this case scenario, the front office can be presented in a form of a corporate sourcing platform, which must be fully separated from the back office. Therefore, integrations with third-party databases are not always approved by the security office of large companies.
It’s much more convenient to evaluate the effectiveness of procurement
Companies use different methods to evaluate the effectiveness of procurement. Basic statistics on the number of transactions and the cost reduction within the sourcing event, which are typically provided by other third-party platforms are not enough for everyone. By having extended statistics the procurement team gets the opportunity to increase the saving on purchases. This includes information on price, seasonal fluctuations, ABC analysis, supplier history data, previous spending, etc.
Such reports help the purchasers to obtain profitable deals with the right suppliers. The own customized system will provide recommendations to the purchasers regarding the best proposal in terms of price, delivery, etc.
The platform should be developed and implemented under the control of professionals that possess deep expertise in terms of purchasing processes. In this case, the implementation of such a solution will enhance the business processes of the company. Typically, external websites provide services without going into the business processes of their customers.