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Automatic Sourcing: Revolutionizing the Procurement Process

By Bjorgvin Gudmundsson, May 20, 2023


In today's fast-paced business environment, efficiency and cost-effectiveness are crucial components for success. One area that has always been a focus for businesses is sourcing and procurement, which has evolved considerably with the advent of new technologies. Automated sourcing is one such innovation that has transformed the way companies manage their procurement processes. This article explores the concept of automatic sourcing, its benefits, and how businesses can leverage this revolutionary technology to streamline their procurement operations.

What is Automatic Sourcing?

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Automatic sourcing refers to the use of technology and automation in the sourcing process, enabling businesses to optimize their procurement strategies by purchasing automatically assigns goods and services from the most suitable suppliers. This is achieved through a combination of machine learning, artificial intelligence, and advanced algorithms, which analyze data from various sources to identify the best suppliers based on factors such as price, quality, delivery time, and other relevant criteria.

Key Components of Automatic Sourcing

  1. Sourcing Rules: Sourcing rules are predefined sets of instructions that guide the automated sourcing process. These rules are created by businesses to specify parameters such as preferred suppliers, blanket purchase agreements, distribution assignments windows, and more. By creating sourcing rules, businesses can ensure that their procurement processes are aligned with their strategic objectives.

  2. Approved Supplier List (ASL): The ASL is a comprehensive list of suppliers that have been vetted and approved by a company for procurement purposes. Automatic sourcing systems use this list to select the most appropriate suppliers for each sourcing requirement.

  3. Supplier Site: The supplier site refers to the location or platform where suppliers provide information about their products and services. Automatic sourcing systems access these sites to gather data on pricing, availability, and other relevant factors, which are then used to make informed purchasing decisions.

  4. Blanket Purchase Agreement (BPA): A BPA is a long-term contract between a buyer and a supplier that establishes the terms and conditions for the procurement of goods and services. Automatic sourcing systems use BPAs to negotiate better pricing, streamline ordering processes, and establish a reliable supply chain.

  5. Inventory Organizations: Inventory organizations refer to the various locations within a company where goods are stored and managed. Automatic sourcing systems use data from these organizations to determine optimal procurement strategies based on factors such as demand, lead times, and available stock.

The Benefits of Automatic Sourcing

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Cost Savings

One of the primary advantages of automatic sourcing is the potential for significant cost savings. By leveraging automation and advanced algorithms, businesses can identify the best suppliers and negotiate better pricing for their goods and services. This not only reduces direct procurement costs but also minimizes the risk of overstocking and eliminates wastage due to obsolescence.

Time Efficiency

Automatic sourcing streamlines the procurement process by reducing the need for manual interventions and time-consuming tasks such as supplier selection, price comparisons, and order placement. This frees up valuable resources that can be redirected towards more strategic initiatives, ultimately improving overall productivity and efficiency.

Enhanced Supplier Relationships

By automating the sourcing process, businesses can maintain more consistent and transparent relationships with their suppliers. This not only fosters trust and collaboration but also encourages suppliers to offer better pricing, value-added services, and innovative solutions in a bid to secure ongoing business.

Improved Compliance

With automatic sourcing systems, businesses can easily assign purchasing rules and restrictions, ensuring that procurement processes adhere to company policies and regulatory requirements. This reduces the risk of non-compliance and associated penalties while also promoting ethical and sustainable sourcing practices.

Greater Agility

Automatic sourcing enables businesses to respond more quickly to changes in market conditions and customer demand. By leveraging real-time data and analytics, procurement teams can adjust their strategies as needed, ensuring that they are always sourcing the most suitable products at the best possible prices.

Implementing Automatic Sourcing in Your Business

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To successfully implement automatic sourcing, businesses need to consider the following key steps:

  1. Define Your Sourcing Objectives: Begin by establishing clear objectives for your automatic sourcing initiatives. These could include cost savings, improved supplier relationships, or enhanced compliance, among others.

  2. Develop Sourcing Rules: Create sourcing rules that align with your strategic objectives and guide the automatic sourcing process. This may involve specifying preferred suppliers, blanket purchase agreement terms, distribution assignments windows, and more.

  3. Implement an Automatic Sourcing Solution: Select and implement an automatic sourcing solution that meets your business requirements and integrates seamlessly with your existing procurement systems. This may involve working with a third-party provider or developing a custom solution in-house.

  4. Monitor and Optimize: Continuously monitor the performance of your automatic sourcing system and make adjustments as needed to maximize its effectiveness. This may involve refining your sourcing rules, updating your approved supplier list, or exploring new supplier site options.

The Future of Automatic Sourcing: Autonomous Sourcing and Beyond

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As the automatic sourcing landscape continues to evolve, we can expect to see even more advanced technologies and capabilities emerge. One such development is autonomous sourcing, which builds on the foundations of automatic sourcing by leveraging artificial intelligence and machine learning to further optimize the procurement process. With autonomous sourcing, businesses can expect to see even greater efficiency gains, cost savings, and strategic advantages as their procurement operations become increasingly intelligent and adaptive.

In conclusion, automatic sourcing has the potential to revolutionize the way businesses manage their procurement processes, delivering significant benefits in terms of cost savings, time efficiency, supplier relationships, and compliance. By implementing automatic sourcing solutions and embracing emerging technologies such as autonomous sourcing, organizations can position themselves for ongoing success in an increasingly competitive global market.

As we stand on the precipice of a new era in procurement management, it is clear that automatic sourcing has not just transformed, but revolutionized the entire procurement process. The time has come to embrace this revolution. Do not be left in the wake of a rapidly changing business environment, instead, move forward with confidence and utilize these innovations to your advantage.

Software Solutions for Automatic Sourcing


Inecta Food ERP, with its comprehensive automatic sourcing features, can help your organization take that giant leap forward. Use it to create sourcing rules, seamlessly manage your approved supplier list, and unlock the full potential of automated sourcing. Take back control of your procurement process, and let efficiency and automation be your guides.

This is your call to action. Don't just adapt to change, be the catalyst for it. Make the switch to Inecta Food ERP today. Revolutionize your procurement process, increase your competitive advantage and stay ahead of the curve in this fast-paced digital world. It's time to redefine what efficient procurement means for your organization. The future of sourcing is not just automatic, it's Inecta.

With Inecta Food ERP, the revolution is at your fingertips. Start your journey to streamlined, efficient, and automated procurement today. So, are you ready to join the revolution?

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