Cognitive Sourcing Survey 2019 and Maturity Model V4 - Final

1. On average, how much time is spent designing and building an RFx?

Less than 1 day: We are on stand-by to run an event on any given day given market conditions.

1 - 5 days: Our events are simple and we typically start from what was done previously.

5 - 14 days: We typically start from previous events / templates, but review for updates.

More than 14 days: We reference previous events / templates, but given the large scope of events we revisit and potentially redesign events.

2. How do you use external sources of insight?

Track market indices for only our most strategic categories.

Track market indices for most or all relevant categories.

Market indices are analyzed by BI tools and supplemented by third party reports.

Market indices, analyst reports, and other sources are automatically fed into category-specific applications.

Category-specific applications are enabled by AI to provide and execute recommendations.

3. How does your organization track current events in your market?

Informally through traditional media and publications.

Some automated alerts monitor our most strategic suppliers

Automated alerts setup for all suppliers.

Artificial Intelligence agents monitor alerts to provide and execute recommendations.

4. What visibility do you get beyond Tier 1?

Virtually None

Limited Visibility

Good Transparency

Full Transparency

5. How many suppliers (direct materials) are being actively managed by your organization?

Less than 150

151 - 400

401 - 1000

1001 - 1500

More than 1500

6. What percentage of these suppliers actively participate in a sourcing event / competitive bid at least one time per year?

Less than 20%

21% to 30%

31% to 50%

51% to 70%

More than 70%

7. What percentage of total direct materials spend is strategically sourced or managed vs. the "tail spend"? (Strategically sourced means a defined category strategy communicated to management and sourcing teams have a strong relationship with the suppliers.)

Less than 30%

30 - 50%

50 - 75%

75 - 90%

More than 90%

8. What is the frequency of scheduled sourcing events or RFQs per year?

Primarily ad hoc, not executed on a regular pre-defined schedule

Primarily Annual events with most suppliers

Quarterly events for key sub commodities or groups of suppliers.

Weekly events executed for key sub commodities or suppliers.

Continuous sourcing with suppliers or sub commodities as needed based on market conditions.

9. What percentage of your total suppliers participate in a sourcing event or competitive bid process at least once a year?

Less than 30%

30 - 50%

50 - 75%

75 - 90%

More than 90%

10. How does your organization typically negotiate with suppliers? Please check all that apply.

Primarily price or cost-focused negotiations

Focus on long-term partnerships

Competitive situations are leveraged whenever possible (e.g. 2 or more suppliers compete for awards)

Target costs or external benchmarks are shared with suppliers

Cross-functional considerations (technology, risk, quality) are considered

Artificial Intelligence provides negotiation recommendations

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11. On average, how many calendar days does it take to conduct a strategic sourcing event from baseline collection to contract execution?

Less than 10 Days: We're integrated with suppliers and utilize an AI- enabled platform to automate many of the event tasks

10 - 30 Days: Most events are "two bids and a buy"

30 - 60 Days: We keep events small and digestible and utilize tools to ease baseline collection and analysis

More than 60 Days: Tools and techniques allow us to consolidate into fewer, much larger events that take more time to collect bids and obtain internal approvals

12. On average, how much time is spent collecting and preparing baseline data for a sourcing event?

Less than 2 days: Our systems are all integrated with data cleansed and maintained on a near continual basis, and our AI platform processes baseline preparation automatically.

2 - 5 days: Our systems are all integrated with data cleansed and maintained on a continual basis

5 - 15 days: Our events are very small and suppliers help provide the data

15 - 30 days: Data is extracted from a Spend cube and/or purpose-built category management tools, so a majority of the time is fine-tuning and getting stakeholder approval.

More than 30 days: Need to pull data from multiple sources, requires manual manipulation, then push into a reporting tool to gain stakeholder approval.

13. How are your sources of insights integrated with your sourcing and RFQ systems?

Manual

Semi-Automated

Fully Automated (little or no manual operations)

14. On average, how much time is spent evaluating bids and providing feedback to suppliers?

Less than 1 day: Our AI tools provide insights and analysis for Category Manager review, and distribute feedback.

1 - 5 days: Our events are limited in scope so we can typically churn through analysis and feedback quickly, albeit manually.

3 - 5 days: Our sourcing tools provide nice reports and collaboration tools to analyze bids, then make feedback fairly easy to distribute.

5-10 days: Our sourcing tools help aggregate bid information, but we analyze in a separate BI tool then distribute feedback.

More than 10 days: We run large events and although our category-specific tools help aggregate bid data and analysis, it takes time to interpret the results then distribute internally to prepare feedback.

15. On average, how much time is spent preparing for and conducting negotiations?

Less than 1 day: Our AI tools identify negotiation opportunities which are communicated to suppliers who we share an open-book relationship with.

1-3 days: Although we manually prepare for negotiations, the scope is limited so we're able to complete it quickly.

3-5 days: We extract the data from our sourcing tools to feed our BI tool and/or create our negotiation materials.

5-7 days: Our sourcing tools help identify negotiation opportunities.

More than days 7: We run large events and although our category- specific tools identify negotiation opportunities, it takes time to align internally and prepare for large-scale negotiations.

16. Who typically leads preparation for the overall commodity/category strategy?

The Category/Commodity Manager

The Category/Commodity Manager + supporting business analysts

Cross-functional alignment with input from manufacturing partners, engineering, supply chain, and finance

Automated commodity/category strategy digital playbooks sourced from an AI/cognitive platform?

17. On average, how much time is spent making award decisions and gaining internal approvals?

Less than 2 days: Our AI tools aggregate bid data, provide data insights, and present those insights and recommendations to Category Managers to approve.

2 - 6 days: Although we manually analyze and award it goes fairly quickly because our events are limited in scope

6 - 10 days: Our final analysis is executed outside our sourcing system, then distributed to decision makers, and awards are made.

10 - 14 days: Our sourcing tools allow us to analyze and award quickly, so most of time is spent reviewing with stakeholders and gaining internal approvals.

More than 14 days: We run large events and although our category- specific tools help, it takes time to conduct final analysis to make award decisions, distribute those to stakeholders, and announce award decisions.

18. What Sources of Insight are typically utilized for negotiations? Please check all that apply.

Historic Data from enterprise systems (ERP, Business Intelligence, Spend Analytics)

Benchmark pricing for standard parts from distributors or third parties.

Contextual insights around supplier financial health, raw material input costs, foreign exchange, news sources.

Market intelligence from third-party research, analysts, published indices

Community insights from peer companies engaged with similar commodity groups or strategic suppliers

Data or research collected from company's supplier network

Attribute-based, bottoms up "should cost" models

AI-generated risks and opportunities

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19. What are the key challenges in your negotiation preparation and execution today?

Relevant benchmark/market trned data, poor supplier relationships

RFX solution to efficiently execute and manage bids, lack of negotiation skill/guidance

Unachievable targets

Challenging commodity market environments

Underlying business externalities (e.g. forex, tariffs/trade, cutstomer markets, global economy)

20. How would you evaluate the effectiveness of the procurement function as a partner in your organization?

Excellent - Procurement is well-regarded and is seen as a key business partner

Fair - Procurement has more influence with some functions than others

Poor - Procurement operates is silos and has difficulty collaborating

21. How involved is Supply Chain & Procurement in NPI?

1 (Limited or no input during design phase, operating in a silo)

2

3 (Visibility and input into development decisions and timelines)

4

5 (Full data consistency and visibility across all functions), supply chain participates in trade-off decisions

22. How important is tracking risks and opportunities during development and NPI to meeting your projected launch date and product cost margins?

1 (Low importance)

2

3

4

5 (Critical)

23. How important is maintaining visibility of BOM health and attributes across functions to meeting your projected launch date and product cost margins?

1 (Low importance)

2

3

4

5 (Critical)

24. As an organization, how do you measure effectiveness and performance of the strategic sourcing function?

Cost + Continuity of Supply - Cost savings goals are balanced with availability metrics like on time in full, shortages/decommits and quality excursions.

Annual Cost Saving Focused - Year over year goals are primarily savings focused, are based upon previous experience and driven from the leadership level down.

Sustainable Cost Management - Near term cost savings goals are balanced with longer-term organizational goals such as reduced risk, valuable partnerships and technology roadmaps.

Value Creation - Cost savings and other strategic goals are measured by how they impact the overall performance of the company, vs. siloed metrics within the sourcing organization. Significant infrastructure and/or processes are in place to link the performance of the sourcing organization to the performance of the company typically via product cost/margin tracking.

Competitive Advantage - Sourcing leaders are given a seat at the table in the strategic direction of the company and measured on how they enable their company to compete in the market via overall financial performance and technology/product leadership. Focus is less on raw cost savings versus margin enablement vs. relevant market competitors.

25. What is the total annual direct materials spend for your organization?

Less than $500M

$500M - $1B

$1B - $2B

$2B - $5B

More than $5B

26. About how many direct materials sourcing professionals are in your organization (including commodity/category manager, sourcing operations, buyers, business analysts, etc.)?

Less than 10

10 - 20

21 - 50

51 - 200

More than 200

27. Does your organization have a digital transformation initiative in procurement and/or direct materials sourcing? If so, how long has it been active?

Nothing formally launched and not active discussion/planning at this time.

Nothing formally launched, but initiatives are at the planning stage

Initiative launched, less than 1 year.

Initiative in place, 1 to 2 years in active status.

Initiative maturing, 2 to 3 years in deployment and adoption.

28. How important do your sourcing professionals consider digital transformation and "data-driven procurement"?

1 (low importance)

2

3

4

5 (critical to success)

29. Where do you place your organization on the technology adoption curve, in general?

Innovator (First to adopt new technologies assuming an element of risk)

Early Adopter (Quick to adopt new technologies, but more risk-averse)

Early Majority (Adopt new technologies once they've been proven)

Late Majority (Slow to adopt new technologies, very risk-averse)

Laggard (Adopt slowly and only when they have to)

30. Organizational structure is key to driving the behavior and effectiveness of sourcing professionals. What organization structure best describes your sourcing team?

Decentralized or Siloed - Direct materials sourcing and commodity management teams are integrated into individual manufacturing sites, operating companies, or product units. Coverage of suppliers or commodity/categories may overlap across different organizational units.

Centralized - A model in which all procurement goes through a single, central organization. Focus is on leveraging corporate spend across the enterprise, standardizing sourcing and procurement processes and compliance. Often includes both indirect and direct procurement categories.

Center-led - Center-led organizations often form a procurement center of excellence (COE) that focuses on corporate supply chain strategies and strategic commodities, best practices, and knowledge sharing while leaving individual buys and tactical execution to the individual business units.

Cross-Functional - Extends on either centralized or center-led organizational models, with clear internal cross-functional process alignment with stakeholders and decision makers in peer groups, including supply management, product operations/engineering, finance, and manufacturing.

Departmental - The need for more centralized management is recognized and new tools and processes that stimulate information sharing across the department are introduced. Some coordination of strategy and approach has started, potentially through a matrix style organizational structure and/or the formation of core teams that cover key categories, commodities or suppliers across the different siloes.

Embedded Cross - Functional Network- Extends on Cross-Functional organizational models, by working with many or most suppliers as additional "functional partners" in the success of the overall organization. Focus is typically on a fair exchange of value in the buyer-seller relationship versus simply cost, quality and availability.

31. Please rate your organization's career development culture.

Stagnant

Average

Exciting & Innovative

32. How often are sourcing professionals sent for training and continuing education?

Informally

Annually

1-2 times per year

Quarterly

Continuously

33. What percentage of time do sourcing professionals spend "putting out fires?"

0-5%

5-15%

15-25%

25-50%

More than 50%

34. Which fires do you deal with most frequently?

Quality Issues

Shortages/Continuity of Supply

Cost Savings

On Time Delivery

Forecasting

Quality

Talent/Expertise

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35. What industry is your organization in?

Automotive

Industrial

Consumer Products

High Tech

Life Sciences

36. With digital transformation approaching supply chain and procurement, is your sourcing professionals team and talent ready to take this on?

1 (low readiness, resistant to change)

2

3

4

5 (high readiness, rapidly adopting)

37. How do you rate the technological proficiency of your procurement team.

Poor

Adequate

Good

Advanced

Very Advanced

38. Systems are key enablers to achieving sourcing goals and supporting the processes to achieve those goals. What tools and technologies are utilized to support strategic sourcing intelligence and negotiation outcomes:

Excel

Sourcing platform for spends analysis. Potentially with some predictive elements and RPQ

Business Intelligent platform, Data warehouses. Most data exported to Excel.

Purpose built sourcing platform with integrated market intelligence services.

Cognitive Sourcing platform (predictive insights, integrated market intelligence, AI recommendation engine)

39. What supply management data sources are managed in systems (not Excel)? Check all that apply.

Supplier insights and master data information is managed by individual commodity managers

Supplier insights and related spend information is stored centrally

Event / Transaction histories are stored centrally

Performance / Risk KPIs are monitored and shared centrally

Bill of Materials are maintained at raw material / commodity level

Recommendations and actions driven by AI

NPI cost management

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40. Do you have a New Product Introduction (NPI) system that tracks risks and opportunities during development that also connects to sustaining cost systems and processes?

No

Yes

41. What technologies solutions does your organization use or plan to implement in the near future?

Digital/Personal Assistants

Contract Lifecycle Management

Sourcing Event Automation/RFx Solutions

Spend Analytics

Supply Risk Management

Market Intelligence

Product Lifecycle Management

Network Optimization

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42. To what extent does your organization leverage artificial intelligence (AI) in its procurement and supply chain processes today?

I don't know

No use

Limited use in one area only

Moderate use

Broad use in multiple areas

43. What are your plans for incremental investment in AI technologies in a procurement context?

I don't know

No plans

Minor investment to test ROI

Major investment within the next 24 months

Major investment within the next 12 months

44. Sources of insight can include internal information, generated from enterprise systems, as well as external information sources. About what % of your Direct Materials spend is captured in your Spend Analysis systems or tools?

We extract data from our ERP to analyze Spend

Less than 50%

50-75%

75-95%

More than 95%

45. How often are your spend analysis and related sources of insights refreshed?

Annually (or less frequent)

Semi-annually

Quarterly

Monthly

Continuously