How does one implement an effective sourcing process?
Solution: Thorough understanding of the supply market with an effective sourcing process that
can be applied immediately. The Strategic Sourcing process provides your sourcing teams with
an easy to follow yet robust process (includes price analysis and cost analysis) that delivers
value every time.
- Assess Internal Needs
- Analyze Supply Market
- Understand Price & Cost
- Develop Sourcing Strategy
Strategic Sourcing is broken down into 4 phases:
AIMDRIVE-AI leverages AI to promote proactive Strategic Sourcing by enabling the following:
- Enhanced Cost Understanding:
- AIMDRIVE-AI builds Should-Cost Models: By using AI-generated should-cost models, participants can identify fair pricing benchmarks for products and services, fostering a deeper understanding of cost structures. It also saves more time – allowing us more time to understand cost and develop a negotiation strategy.
- AIMDRIVE-AI can use various units to develop cost models making them versatile
- Enhanced Understanding of Supply Market:
- Market Dynamics Analysis: AIMDRIVE-AI‘s ability to analyze supply markets and generate trends provides sourcing teams with insights into market conditions. This supports better decision-making and identification of reliable suppliers.
- AIMDRIVE-AI provides accurate benchmarks through its should cost models and ICPs which can be used to compare supplier proposals and choose the most suitable supplier.
- Improved Cost Benchmarking:
- AIMDRIVE-AI builds Should-Cost Models: These models allow sourcing teams to evaluate supplier proposals against realistic cost benchmarks. This is essential for ensuring fair pricing and understanding value drivers in the supply chain.
- AIMDRIVE-AI generates Industry Cost Profiles: By providing industry-specific data, the tool helps sourcing teams validate costs and compare supplier efficiency.
- Streamlined Price Negotiation:
- Price Analysis: AIMDRIVE-AI compares quoted prices against market averages and trends, allowing teams to identify overpriced proposals. This capability ensures more effective negotiations.
- Real-Time Market Trends: Continuous monitoring of market trends (both long term and short term) provided by AIMDRIVE AI enables sourcing teams to anticipate price changes and negotiate strategically. It analyzes markets and generates trends that will help sourcing/procurement teams gain valuable insights into market conditions, causing better decisions.
- Cost Breakdown and Identification of Key Drivers:
- Bill of Materials and Cost Breakdown: AIMDRIVE-AI breaks down costs into components like materials, labor, and overhead, helping sourcing teams focus on critical cost drivers during supplier discussions.
- Actionable Insights: Identifying cost contributors allows for targeted cost optimization strategies.
- Efficiency: AIMDRIVE-AI estimates waste factor for materials while manufacturing, enabling the sourcing team to review the efficiency of their suppliers.
- Data-Driven Sourcing Strategy Development:
- Risk-Benefit Analysis: AIMDRIVE-AI provides data for assessing risks and benefits associated with different sourcing strategies, ensuring alignment with organizational goals. (Example: Increase in market prices)
- Support for Long-Term Supplier Partnerships:
- Continuous Improvement: AIMDRIVE-AI enables ongoing performance evaluation and cost optimization with real time data – enabling sustained cost management.