Sourcing Features and Functions
Many consider sourcing to be the heart of SRM and commodity management to be the heart of sourcing. Advanced sourcing suites are rich in analysis and decision support technology to absorb huge amounts of data quickly and make intelligent sourcing decisions. They also lay the foundation of execution through the RFx process and managing performance against contracts. Risk management is an area which spans the full lifecycle, but is most associated with the sourcing function.
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Commodity Management
Commodity management is the central sourcing function. Tools for analyzing global spend across many dimensions are needed to come up with optimum sourcing decisions. Tools to create and manage the supply plan give unambiguous direction to procurement.
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Supplier Management
Supplier management enables finding and qualifying the best supplier, maintaining the list of approved suppliers, maintaining and accessing a database of supplier profile information, and critically measuring, monitoring, and analyzing the performance of suppliers.
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RFx and Bid Management
Tools for creating and distributing a request for information, request for proposal, or request for quotation (we are using the term RFx to signify any of these) are critical in environments of high volumes of RFXs. These should allow a rich set of criteria to be considered and provide automated analysis and an iterative/interactive cycle with the supplier participants.
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Contract Management
Sarbanes-Oxley* may convince organizations to do a better job of recording and monitoring their contracts. Contract management functions should streamline the contract creation process, provide enough flexibility for the nearly infinite variety of contracts that organizations utilize, and proactively monitor the corporations progress against their commitments in the contract (e.g. purchase volumes), generating alerts when attention is needed. *The Sarbanes-Oxley Act, passed by US congress in response to recent accounting scandals, requires companies to certify the fairness and accuracy of financial statements and the effectiveness of disclosure controls and procedures.
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Risk, Liability, and Flexibility Management
Risk, liability, and flexibility must be managed starting with the design stage through to the end-of-life of a product. There are a number of emerging technologies providing planning, analysis, and execution tools that can deal with distributions of probabilities, rather than forcing you to give a single exact number for things like forecasted demand and expected supply price and availability. These tools also allow the creation and execution of structured supply contracts to mitigate risk. Management of excess and obsolete inventory risks is another important component of risk management.
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Supplier Relationship Management (SRM) Features and Functions
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