Outdated processes and disconnected technology have long presented obstacles to supply chain forecasting and sourcing. But sourcing and financial planning and analysis (FP&A) teams are increasingly embracing cloud-based tools that bring them real-time data analysis to support better business decisions and greater growth.
Teams with access to aggregated data and automation tools can better understand their marketplace than ever before, driving better results in a range of business drivers, including improved headcount management, demand reduction, more streamlined project requests, and tighter inventory control.
Overcoming Barriers to Collaboration
Sourcing and FP&A teams using legacy software often work in silos, which can trap data and insights, giving both teams and their organization an incomplete picture of spend under management. Lack of data impedes management from accurately tracking costs and forecasting expenses, increasing the risks of supply chain shortages or surpluses and the procurement of unnecessary services.
A lack of visibility into planned spending initiatives increases the time and cost to improve spend under management, according to a new Harvard Business Review Analytic Services research report, “Optimizing the Supply Chain by Aligning the Planning and Sourcing Functions.”
This disconnect among teams makes it difficult to forecast spending. Supply chain disruptions only add to the budget pressures of organizations already struggling from the effects of the pandemic, geopolitical volatility, and rising inflation. Sixty-four percent of the 536 financial planning and procurement executives surveyed in the HBR report said their organization’s procurement costs for goods and services were over budget in their latest fiscal year.
“Planning and procurement are usually done by very different people using very different data,” says Chris Caplice, executive director of the Massachusetts Institute of Technology (MIT) Center for Transportation and Logistics. “The planning culture is much more analytical. Sourcing is much more execution-focused.”
Enabling real-time collaboration between sourcing and FP&A teams can help alleviate much of the pressure these teams feel.
Aligning Technology with Workflow
When sourcing and FP&A supply chain teams align on business objectives, they can help ensure resiliency while they navigate uncertainty. Shared data empowers planning teams to formulate accurate budgets and forecasts that reflect changing market conditions. At the same time, access to real-time savings information helps managers reallocate resources among existing projects, begin new projects, or reserve funds for the future.
Increasing collaboration between sourcing and FP&A teams also allows for proactive budget planning that reflects their shared information. Connected and collaborative sourcing can result in better decision-making by eliminating communication silos, providing real-time access to data, and strengthening cross-functional relationships.
“The most progressive executives I know are looking at exactly this issue of collaboration between planning and sourcing,” says consultant Harold Good, president and CEO of Procurement Pros Group. “They’re asking how their planning and sourcing functions communicate with each other, and how they can ensure that everyone has ccess to the same relevant data.”
Strategic sourcing technology gives organizations the ability to combine data with other savings drivers from across the business, enabling the optimization of cost factors such as logistics and inventory. This capability facilitates better decision-making and tighter coordination of materials, capacity, and personnel.
Real-Time Insights, Better Decisions
Enterprise investments in technology enable the implementation of strategic sourcing solutions quickly—and with rapid potential returns on investment (ROI). The key to ensuring ROI is software that helps sourcing teams better analyze value, negotiate, and use actionable data based on real-time market conditions.
Sharp Healthcare in San Diego needed to consolidate and streamline a sprawling hodgepodge of inefficient supply chain management solutions, legacy manual processes, and three contracting systems.
By migrating to a more robust strategic sourcing platform, Sharp dramatically improved its supply chain team’s ability to collaborate and share information. The updated software and processes saved the company $4.2 million after just six months in service.
“From our day one, we’ve gotten tremendous value in greater engagement with our stakeholders—including suppliers—plus cleaner data and easier, real-time reporting from a single source,” says Ryan Koos, chief supply chain officer at Sharp.
In addition to cloud-native software, organizations interested in the most advanced technology need to take advantage of the power of machine learning (ML). Intuitive dashboards and reporting can offer visibility of spend and sourcing projects across an organization, helping teams prioritize projects to better measure their business impact and track progress toward enterprise goals.
Strategic sourcing software’s features can help enterprises connect enterprise supply chain applications, ensure data integrity, and facilitate collaboration, improving stakeholder and supplier engagement and resulting in higher efficiency and lower costs.
“You want to be lean while being agile,” says Chad Autry, professor of supply chain management at the University of Tennessee. “Most companies can’t be both, but there are a few that can, and they are really smoking the competition.”
For more detailed insights on the benefits of strategic sourcing and collaboration technology, download the HBR–Analytic Services research report “Optimizing the Supply Chain by Aligning the Planning and Sourcing Functions.”
>>> Read full article>>>
Copyright for syndicated content belongs to the linked Source : Harvard Business – https://hbr.org/sponsored/2023/07/drive-better-business-results-with-cloud-based-fpa-and-sourcing-collaboration-tools
