The sourcing process isn’t always as fun as people tell you. (People do say it’s fun, right?) Okay, oftentimes it’s actually pretty challenging. From building requests to fielding quotes to managing vendors to approving contracts, the whole process is a reliable headache for organizations of all sizes and structures. At any given stage, you’ll find several balls in the air and several teams working in tandem to fulfill a procurement effort.
While the process is trying for nearly all of us, there’s no denying that multi-location organizations take the cake. You face the same problems as more traditional single-location businesses but compounded across each of your sites. And the obstacles somehow seem to grow exponentially as you onboard new locations.
While each of your property managers has a seemingly infinite list of day-to-day responsibilities, they’re also burdened with sourcing new products, services, and equipment for their site. Their approach to initiating proposal requests, maintaining vendor relationships, and managing contract/vendor/pricing information is almost certainly different from the approach of the next location manager. Now multiply that by your other 20 locations. God forbid you ever want to quickly pull up any of that information from one of the properties.
It’s a nightmare. Maybe you’ve tried to standardize the process in the past. Maybe you’ve considered hiring dedicated resources at each site. Maybe you’ve implemented a shared storage platform. Maybe you’ve just thrown your hands in the air and embraced the anarchy (and 2020 would be proud). But nothing has worked.
So what can you do? How can you optimize this whole sourcing process and consolidate the underlying purchasing power of your larger organization?
1. Centralize the Sourcing Function
Let’s start by trimming some redundancy. Each of your locations is likely sourcing similar (if not the same) products, services, and equipment. Instead of having each individual property build a request and reach out to vendors independently, centralizing that purchasing function will significantly reduce collectively duplicated work.
Whether through a dedicated team, a platform, or a combination of the two, consolidating the sourcing function will allow your location managers to focus on what’s most important – your customers, managing employees, and driving revenue.
2. Package Multiple Locations for Volume Pricing
Now that you’ve pooled your sourcing efforts, you can get a little creative. Instead of sourcing for each property on its own, it’s now much easier to package multiple locations together. Whether via a regional or a national bidding event, the additional volume will attract more competitive proposals and more favorable contract terms.
At this point, you can start standardizing bidding templates that will foster quicker storage and analysis of bids received. This becomes critical for steps #4 and #5.
3. Field Multiple Bids for Each Sourcing Event
We’re all guilty of this one. You get a new request and you make a quick call to your buddy to get his quote. Done. Onto the next assignment.
Honestly, I get it… Especially for property managers and their insurmountable to-do lists. But it’s always a good habit to test the market with at least 3 bids. Even from a negotiation standpoint, you give yourself much more leverage and optionality. Again, this step becomes significantly easier when centralizing the sourcing effort with a dedicated team/platform.
4. Consolidate All Contract, Vendor, and Invoice Data
This one requires some dirty work, but it’s necessary to reach the summit that is step #5. Thankfully you now have a team or product to own the effort.
Your newly minted sourcing squad will start by gathering all of your contract, vendor, and invoicing documents across your properties. (Don’t forget bids received from vendors who didn’t ultimately win the business.) The analysts will then build respective databases for contracts, vendors, and pricing.
Structure and formatting are critical here. Building out the databases in the right way will promote easier maintenance and continual additions.
5. Leverage Sourcing Data to Drive Down Costs
This is everything we’ve been working toward – a more empowered, intelligent purchasing organization. With all of your critical information consolidated and normalized, you can now leverage data insights in vendor selection, contract negotiations, budgeting, forecasting, and building RFPs.
When organizations work through the five steps to reach an elevated stage of sourcing intelligence and maturity, they reduce their third-party spend by 15%-25%. Maybe more importantly, senior management now has real-time, comprehensive insight into the procurement activities across the portfolio.
For a multi-unit structure, this more holistic approach empowers leadership to make more informed, strategic decisions about how to grow their business. Besides, now that it’s all streamlined, why not add another site?
