Spend Matters Research

Sourcing Optimisation – Extracting Value from Complexity

Peter Smith, Spend Matters UK/Europe

This paper looks at how optimisation tools are changing the way in which organisations can achieve increased value and performance from large-scale and complicated sourcing challenges.

Part 1 of this paper looks at the range of factors that define what makes certain procurement exercises complex and difficult to execute. We explain why the process arrived at in most cases for complex procurement requirements has some inherent flaws; particularly in that it relies on the buyer making judgments that could be better explored by suppliers in the market.

In Part 2, we explain how recent development in procurement ‘optimisation’ technology is opening up a different approach to contracting, whereby suppliers have more scope to express different views of how they would like to meet the buyer’s requirements. The huge range of potential options offered can then be optimised; and then a range of constraints can be introduced around that optimisation. Finally, we look at some of the key factors procurement and business executives should consider if they are looking to introduce optimisation and the tools available in the market, and four factors that they should consider in looking for a provider to support them in this area.

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