Visit CAPS Research on the web at:
www.capsresearch.org
FOR IMMEDIATE RELEASE
The Role of Optimization in Strategic Sourcing
Deliver real value to your sourcing events.
(TEMPE, Arizona) August 4, 2009 — Sourcing optimization is a process that
uses a combination of mathematical models, computer software and computer hardware
to analyze large numbers of supplier bids and business scenarios to identify "optimal"
sourcing decisions. This powerful combination of mathematics and computer capability
gives suppliers wide freedom to express their bidding preferences in response to
a request for quotes and gives buyers the ability to analyze these disparate bids.
The process has also been called "bid optimization," "decision guidance" and "expressive
bidding." In this CAPS Research report, the term "optimization" is used to refer
to this process.
Optimization can deliver real value in sourcing events and is another decision support
system to help supply managers reduce costs. It gives sourcing teams a tool to extend
the depth and breadth of their analysis capabilities in a timely manner. Analyzing
multiple scenarios gets the buyer closer to the "sourcing sweet spot," that is,
those sourcing decisions that balance the needs of internal users with supply market
realities at competitive prices. Finally, it enables a high level of communication
between buyers and suppliers, and buyers and internal stakeholders. Optimization
can lead to better relationships with suppliers because:
- Awards can be based on price, risk, quality, delivery and other key performance
indicators, approaching a total cost solution.
- Suppliers receive feedback during the event and have an opportunity to submit more
competitive bids.
- Training is conducted with suppliers on how to submit their bids.
- The bidding process is open and transparent.
Optimization is not the right tool for every category or for every buy, but it does
provide decision support for a wide variety of complicated and complex buys and
can lead to significant cost savings.
The complete study is available on the CAPS Research web site and also contains:
- Optimization Model
- Optimization Results, Spend Applicability and Business Cases
- Challenges and Issues and the future of Optimization
Click on the following link to access the Focus Study, "The Role of Optimization
in Strategic Sourcing":
http://www.capsresearch.org/publications/pdfs-protected/giunipero2009.pdf
If you're a first-time visitor to the CAPS Research website you will be prompted
to register when you access reports. Otherwise, just enter your previously established
login data.
CAPS Research is a nonprofit research organization founded in 1986 to provide leading
research to our strategic-minded corporate sponsors and to the public. Our mission
is to work in partnership with a global network of executives and academics for
the discovery and dissemination of strategic supply management knowledge and best
practices. CAPS Research is jointly sponsored by the W. P. Carey School of Business
at Arizona State University, and the Institute for Supply Management™ and
Global 1000/Fortune 500-size organizations.
Media Contact:
Clare Donnalley
Marketing Manager
CAPS Research
Voice: 800/888-6276 extension 3007
cdonnalley@capsresearch.org
- # # # -