Sourcing is getting smarter. To start, many organizations have already pivoted from a tactical to a strategic sourcing mindset—which can make all the difference when it comes to gaining and retaining a competitive advantage.

Why? Because organizations with strategic sourcing mindsets look beyond price and cost savings-centered supplier selection initiatives. They instead focus on continuous improvement. They consider factors—like supplier performance or sustainability—that support long-term partnerships, advance business needs and increase purchasing power. Successful strategic sourcing often results in process optimization, cost management, customer satisfaction, risk management, increased sustainability and other benefits.

But now, the benefits of strategic sourcing are becoming even more attainable thanks to innovation. Here are four smart technologies modernizing strategic sourcing processes today:

Automation

Business process automation (also considered a type of business process outsourcing) is pervasive across industries, minimizing manual tasks in accounting, human resources, IT and more. Now, sourcing and procurement professionals are reaping the rewards of such automation: streamlining workflows, boosting the bottom line and finding efficiencies. Sourcing teams are automating processes like data analysis as well as supplier relationship management and transaction management.

For example, the IBM Sterling Transaction Manager automates manual transactions between businesses and suppliers. This helps reduce errors to improve data quality and response times to questions, which improves customer and supplier satisfaction. What’s more, automating transactions reduces the staff needed to onboard new suppliers, freeing them to focus on higher-value tasks.  

Blockchain

Information is an invaluable business asset. Blockchain technology ensures that it’s stored, accessed and shared quickly, accurately and transparently. In sourcing strategy, blockchain technology helps track orders, payments, accounts and more.

For example, blockchain-backed contract management, when combined with automation, creates efficiencies and offers a high level of security. It works like this: “if/when…then…” statements are written into code on a blockchain. Then, when a predetermined condition is met and verified—such as releasing funds—the contract is executed immediately. Plus, blockchain transaction records are encrypted, making them incredibly difficult to hack or alter.

More than 60% of Americans surveyed said they would pay up to a third more for products that are responsibly made and transparently sourced. In response to increasing expectations from customers and stakeholders alike, some businesses are leveraging the transparency and immutable record of blockchain to uphold their ethical and sustainable sourcing practices.

For instance, one company is using a network of trusted suppliers built on IBM Blockchain® to provide product provenance for sustainably sourced shrimp. Now, anyone can follow the full journey of a shrimp through the supply chain.

Advanced analytics and artificial intelligence (AI)

Analytics engines and their “big data brains” provide real-time sourcing flexibility and visibility to enhance order management and inventory systems. With cognitive intelligence in their toolbelts, sourcing teams can better understand and act on changes in the increasingly complex supplier market—as they happen. The ability to make these sourcing decisions in real-time can help increase profits during peak demand periods and better meet customer expectations. Try out cognitive intelligence free for 30-days.

In addition to enhanced decision-making, flexibility and visibility, analytics engines paired with AI can help manage supplier risk. For example, IBM Trust Your Supplier’s advanced analytics and AI continuously monitor suppliers’ regulatory compliance to enable a 24/7 trusted supplier network.

Another exciting use case for AI in sourcing can be found in smarter control towers. Traditional control towers can’t always provide visibility across silos, drive actions, integrate with third-party data and keep pace with ever-evolving modern supply chains. The next generation of control towers is powered by AI, with intelligent workflows and true end-to-end visibility to help forecast supply and demand fluctuations and navigate disruption.

How is sourcing strategy different than procurement strategy? 

Often considered synonymous with the procurement process, sourcing is a distinct process within supply chain management. While procurement teams oversee the end-to-end process of acquiring goods and services, sourcing teams consider the “who,” or the providers and potential suppliers themselves. They handle upstream sourcing activities like contract negotiation, sending requests for proposals (RFPs) and requests for quotes (RFQs) as well as managing the supplier relationship once selected. However, due to their symbiosis, sourcing and procurement strategies often share similar initiatives, business goals and metrics.

Transforming your sourcing strategy

Building a strong sourcing strategy is critical for navigating the increasingly complex supply chain landscape. Strategic planning of supply chain processes requires technology, tools and partnerships that accelerate your goals—improving supply chain management, resiliency and sustainability.