Tag Archive for: Sourcing Execution

Execution-as-a-Service (EaaS): Outcome-based Sourcing

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Nowadays, most procurement teams already know what needs to be done. Category strategies exist; opportunity assessments are complete, and savings targets are established. The real constraint that they’re up against is time and capacity. There are only so many sourcing events, renewals, and supplier changes a lean team can handle in a year.

Execution-as-a-Service, or EaaS, offers a different way to close that gap. Instead of buying extra hours or headcount, organizations work with a partner to deliver specific outcomes that they align on together. The internal team and the third party work in parallel and/or collaboratively, which means more of the roadmap gets done, and it gets done earlier in the year, providing buffer in case things don’t go to plan and often resulting in more savings, faster, leaving more time for the benefit to accumulate within the year.

Moving work out of the “someday” pile

There is no shortage of ideas amongst procurement teams. Where a shortage does exist is when it comes to execution capacity. Pipelines fill with solid opportunities that never quite move from “planned” to “in progress” to “complete.”

EaaS is designed to move that work forward. What is regarded as execution will vary by company. For some, it is focused on identifying and substantiating savings in defined categories, building a credible business case, and handing that off to the internal team for realization of savings. For others, it means the inverse, taking viable opportunities and implementing them.  Or it may mean running the entire process from development of the savings forecast all the way through implementation, reporting, and purchasing compliance. 

The key point is that the work is no longer stuck in ideation or aspiration. It is owned, scheduled, and tracked to completion with the typical shortage of resources and time no longer being an obstacle.

Making outcomes the center of the model

Outcome-based models can sound more complex than they are. At a practical level, they ask and answer three questions.

  • What specific results are we trying to achieve?
  • How will we measure those results?
  • How will compensation connect to those results?

Those results might include:

  • Sourcing events completed in a specific set of categories
  • Savings identified or realized against an agreed baseline
  • Supplier transitions completed on time and within an acceptable risk profile
  • Adoption or compliance levels for new agreements

The commercial details can vary, but the principle should stay simple. Both parties know what success looks like and how it will be recognized. That focus keeps conversations centered on impact rather than effort.

Where EaaS adds the most value

EaaS is not a universal answer, but there are situations where it tends to make a noticeable difference.

One common case is a team with more addressable spend than capacity. The strategy is clear, and leadership expects movement, but there are not enough hands to execute or even fully size the work. In this situation, a partner can take a defined slice of the roadmap and run structured savings identification as well as early sourcing activity. That includes benchmarking, mapping, and validating a pipeline of opportunities, and shaping business cases and forecasting savings. The internal team then uses that clarity to prioritize, engage stakeholders, and implement savings strategies where opportunities are most significant and/or have the greatest ROI along with those where relationships and change management matter most. This works well when internal relationships are strong but bandwidth for diagnostics and early-stage execution is limited.

Another good fit is in time-bound environments such as private equity-backed businesses or large transformation programs. When the pressure is on to deliver value within a specific window, running waves of sourcing or savings identification concurrently can compress timelines in a way a small internal team cannot match.

In other words, execution in an EaaS model does not have to look the same from one company to the next. It might mean sizing and sequencing opportunities, running full sourcing waves, or taking specific categories from idea to contract while the internal team focuses elsewhere. The common thread is that defined pieces of work move forward with clear ownership and outcomes, instead of sitting on a list of good intentions.

Conditions for success

EaaS works best when a few fundamentals are in place.

First, the scope needs to be clear. Vague requests such as “help us save more” rarely lead to a good experience on either side. Defining specific categories, spend ranges, or supplier groups gives everyone a shared view of what is in scope.

Second, there has to be an agreement on how outcomes will be measured. That includes baseline selection, timing of benefits, and how identified and realized savings will be treated. Bringing Finance into that conversation early is one of the simplest ways to avoid friction later.

Third, governance should be practical and explicit. The internal team and the provider need to know who owns which stakeholders, who can make which decisions, and how progress will be reported. EaaS should feel like an extension of the team, not a side project that lives on its own.

Lastly, knowledge transfer should not be an afterthought. Each wave of work should result in better documentation, cleaner data, and clearer playbooks. That way, the internal team grows stronger and more self-sufficient over time.

How EaaS fits alongside the internal team

EaaS is not a replacement for a strong internal procurement function. It is a way to expand execution capacity while keeping strategy, stakeholder relationships, and long-term category ownership inside the business.

For teams that have already invested in spend analysis, category strategies, and stakeholder alignment, EaaS can be the missing link between planning and results. More of the roadmap moves, more opportunities are either identified or realized, and more progress lands in the current fiscal year instead of being pushed into the next one.

If your team has a clear roadmap but limited capacity to execute it, Velocity can help turn plans into measurable outcomes. Contact Velocity Procurement to explore how an Execution-as-a-Service model can accelerate results, unlock savings sooner, and keep progress moving within the fiscal year.

Key Considerations for a Gainshare Sourcing Engagement (part 1 of 2)

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Highlights

There are many things to consider when evaluating if a gainshare sourcing engagement is right for your organization.

These include:

  1. The amount of unmanaged spend in your organization
  2. Your internal resource availability
  3. Existing subject matter expertise (and gaps)
  4. Internal budget constraints
  5. Your potential and progress towards hitting savings targets
  6. Sourcing’s relationship with stakeholders
  7. The level of executive support procurement has
  8. Operational budget constraints

Main Blog

Reflecting on the past few years, things have certainly changed for procurement professionals around the world.  As enterprises face unprecedented, compounding challenges related to inflation, supply chain disruption, and the great resignation; procurement leaders are looking externally for support to meet their objectives now more than ever. 

In doing so, they’re also considering the various commercial options offered by leading firms with gainshare being an old favorite of many.  Gainshare in this context is a risk-reward (or contingency-based) engagement model in which the third party is paid a portion of the savings it produces.  Bearing in mind the aforementioned challenges, many are wondering if gainshare is viable in general, and specifically for them, their organization, and their objectives given the market and supply landscape in 2022.

There are many things to consider -each with their own pros and cons- when deciding if engaging the support of a third party to reach savings targets.  This list will be helpful to anyone who is considering in engaging a third-party team on a gainshare basis.

  1. Unmanaged spend: If you have significant unmanaged spend, the savings opportunity will tend to also be significant, which may mean disproportionate gainshare fees compared to the level of effort exerted by the third-party firm.  However, the benefit of realizing those savings and bringing the spend under management with a guaranteed ROI is very often considered by procurement leaders to be worthwhile.
  2. Lean team: If you lack the resources to meet your target, hiring a third party on a gainshare basis is a great way to supplement your internal team and accomplish more together and in parallel than either of you would be able to separately.
  3. Subject matter expertise gap:  If your team does not have the experience and expertise to effectively manage certain categories of spend, supplementing your team with the right resources to provide coverage for these gaps in your wave plan will yield better results and allow your team to focus on where they can be most effective.  However, you will still need a plan to close these gaps to sustain results and manage spend into the future.
  4. Lack of budget:  When you’ve made the decision that you will need external help, proving the business case and securing the budget for it may cost more time than you have or be fruitless altogether.  A gainshare engagement takes budget out of the business case as your payment is funded by savings.
  5. Savings target: Most procurement organizations have a savings target, amongst other KPIs, to hit.  As alluded to above, having the right amount of arms and legs to do the work as well as the right skills, experience, and subject matter expertise, can often make the difference between falling short of your target and hitting it comfortably.
  6. Stakeholder engagement:  If procurement has a good relationship with many or most business stakeholders a third party is more likely to be successful in collaborating with those individuals and teams.  If this isn’t the case, beware of extended timelines or even failure to launch projects in some categories as the organization does not have anything to lose by failing to engage and support the initiative since no up-front fees have been paid.
  7. Executive support: Like stakeholder engagement, executive support can also make the difference between a successful gainshare engagement and an unsuccessful one.  In addition, executive support can often mitigate risks associated with stakeholder engagement.
  8. Operational budget pressure:   In addition to savings targets, many procurement organizations are also under pressure to reduce operational costs related to staff and management.  In those cases, leveraging cost-neutral third-party support can be an effective means to meeting spend management objectives without being capability constraints.

Collaborating with strategic sourcing expertise on a gainshare basis is certainly a viable option for many, even amidst all the change and challenges we continue to face. 

In part 2, I’ll provide insights on what to look out for when engaging on a gainshare basis to avoid pitfalls and ensure success. 

In the meantime, by evaluating the pros and cons associated with the list above, you may determine a gainshare engagement a great fit for you or you may have questions that you would like to discuss.  Contact us here, or at info@velocityprocurement.com to get in touch and learn more about how you can elevate procurement, realize your annual objectives, and enhance your internal capabilities through collaboration with a leading procurement services provider.

Tag Archive for: Sourcing Execution

AI in Procurement: Practical Insights Beyond the Buzz

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Procurement leaders already know that AI is important.   However, where it’s actually worth applying right now is more difficult to determine, especially when the function is still balancing cost pressure, stakeholder demands, supplier issues, and a long list of work that is not going away.

That is where the conversation needs to get more practical.  The near-term value of AI in procurement is not that it replaces procurement work. It is that it shortens the distance between data, judgment, and action.  It helps teams get to a clearer view faster, reduce manual effort, and move work forward with less delay.

Like most things worth doing, the best starting point is usually the least glamorous one.  AI is already useful in areas where teams spend too much time organizing information before they can even begin making decisions.  Spend cleansing, supplier clustering, contract clause extraction, and first-pass reporting are all examples of this. These are not headline-making use cases, but they matter because they reduce friction in work that shows up every week.  When procurement can shift focus to taking action rather than wrangling data, the value is immediate.

There is another group of use cases where AI can clearly help, but human judgment still matters too much to pretend otherwise.  Sourcing strategy is one.  Negotiation preparation is another.  Supplier risk reviews, opportunity sizing, and supplier performance trend analysis also fall into this category.  AI can summarize inputs, spot patterns, identify outliers, and give teams a stronger first cut.  What it cannot do, at least not in a way most organizations should fully trust yet, is weigh internal politics, judge stakeholder readiness, or navigate commercial nuance on its own.  Procurement still has to do that part.

That distinction can’t be overstated because it helps companies avoid two mistakes.  The first is expecting too little from AI and treating it as a nice-to-have productivity tool.  The second is expecting too much and chasing a fully autonomous future before the function is ready for it.  There is a lot of marketing noise right now around agentic AI, autonomous procurement, and end-to-end intelligent workflows.  Some of that direction is real, and over time it will matter a great deal.  But most procurement teams do not need to start there. In fact, many probably should not.

What they should not overzealously pursue right now are the use cases that sound impressive but depend on weak process discipline, unclear ownership, or black-box logic.  Fully autonomous sourcing decisions fall into that category.  Opaque savings predictions that no one can explain also do, or AI-led supplier management that ignores the reality of live business relationships.  These ideas may become more viable over time. For most clients, they are still the wrong first bet.

A better approach is to choose one or two use cases where the work is frequent, measurable, and frustrating enough that improvement will be felt quickly.  Start where teams already know the pain.  Repetitive RFP drafting.  Contract abstraction.  Supplier performance summaries.  Pipeline reporting.  Keep humans in the loop.  Define what good looks like before the pilot starts.  Then, use the pilot to test the tool and expose the data and process issues that may be slowing the work down in the first place.

This is where AI becomes more than a buzzword.  It becomes a way to make good procurement teams faster, more consistent, and more responsive.  Over time, more advanced tools and agentic models will take this further.  They will improve reliability, automate more of the workflow, and support better decision-making at scale.  But procurement does not need to wait for that future to start getting value.

The companies who will benefit most in the near term are not the ones chasing the biggest AI vision, they are the ones choosing a few smart places to reduce delay, improve visibility, and move from analysis to action faster.

Supplier Risk Execution: Going Beyond Assessment

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Most organizations do not have a visibility problem when it comes to supplier risk.  They have a follow-through problem.  Scorecards are built, dashboards are reviewed, and red flags are discussed.  Then the meeting ends, and very little changes.

That is where many supplier risk programs fall short.  Assessment is important, but it is only the starting point.  If a supplier keeps missing delivery targets, quality slips continue, or financial stress indicators worsen, the value of that visibility depends on what happens next.  A scorecard that does not trigger action becomes documentation, not risk management.

This is why supplier performance data needs to be treated as a living operational signal rather than a quarterly reporting exercise.  The point is not to admire the trend line.  The point is to use it.  When performance starts to move in the wrong direction, the response should be timely and deliberate.  Waiting for the next formal review cycle often means waiting too long.

That response does not have to be dramatic.  In many cases, it starts with something practical and structured.  A corrective action plan with clear owners and deadlines.  A focused supplier meeting to address recurring issues.  A site visit or process review for a critical supplier.  A temporary escalation path when a pattern shows up more than once.  The important thing is that the risk signal leads to a decision, not just another data point on a slide.

Not every supplier issue deserves the same level of response.  A high-risk supplier supporting a critical operation should not be managed the same way as a low-spend vendor that is easy to replace.  Risk tiering matters, but it should shape the action plan, not just the label.  Too many organizations score suppliers carefully and then respond to every issue in roughly the same way, which usually means not much happens unless the problem becomes severe.

Ownership also matters more than most scorecards suggest.  Who owns the supplier relationship?  Who owns the corrective action plan?  When does Procurement lead, and when should Operations, Quality, Legal, or Compliance step in?  One of the fastest ways for supplier risk management to stall is when everyone assumes someone else is handling it.  If execution is the goal, ownership cannot be vague.

There is another point worth making here.  Sometimes the supplier is not the only source of the problem.  Weak forecasts, last-minute changes, unclear specifications, or inconsistent communication from the customer side can all contribute to supplier instability.  Mature supplier risk management looks inward as well as outward.  If the buying organization is helping create the conditions for poor performance, the corrective action needs to include internal change too.

A stronger supplier risk program is not necessarily a more complex one.  It is one that connects signals to actions in a routine, disciplined way.  Issues are identified early.  Owners are assigned.  Timelines are set.  Escalation paths are clear.  Progress is reviewed until the issue is closed or the supplier strategy changes.

That is the shift.  Moving from reviewing supplier performance to actively managing it.  Moving from static scorecards to operational signals that drive response.  Supplier risk is not reduced because it was measured.  It is reduced because something changed.

Quantifying ROI Faster: Predictive Modeling for Sourcing Outcomes

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Many procurement teams find themselves having to prove their value after the fact. A sourcing event runs, a negotiation finishes, and then someone builds a business case that explains the savings. By that point, stakeholders have already moved on to the next priority.

Predictive modeling offers a different path. Instead of waiting for results, procurement can use the history it already has to estimate likely outcomes before launching an event. That does not require advanced tools or data science teams on day one. More sophisticated platforms will push this further over time, but there is a practical version most teams can start using now.

From rear-view reporting to forward-looking choices

Today, a lot of sourcing work still relies on judgment and anecdote. A category “feels” like it has potential, or someone remembers a good result from a similar project a few years ago. That may work occasionally, but it is hard to defend in front of Finance or the C-suite.

Predictive modeling in this context is simple. It means using past events, market context, and a few key attributes to estimate what is likely to happen if you run a new project. Not with perfect precision, but with enough confidence to decide whether the effort is worth it and how to prioritize it against everything else on the roadmap.

What predictive modeling looks like in sourcing

In a sourcing environment, a predictive model does not have to be complex. It can be as straightforward as a structured way of saying, “When we run events like this, in categories like these, under these conditions, we usually see a certain range of outcomes.”

Inputs that tend to matter include:

  • Historical savings by category, region, and supplier landscape
  • Contract age and baseline quality
  • Market and benchmark data where it exists
  • A simple view of stakeholder readiness or change complexity

With even a modest amount of structured history, you can start to see patterns. Those patterns can then inform expectations for new events. The point is to move away from starting every business case from a blank page.

Where predictive modeling speeds things up

Predictive modeling is most useful when it helps you move faster, not when it adds another layer of analysis. A few places where it tends to make a difference:

It can help you prioritize the pipeline. When you have a long list of potential projects, a modeled view of likely savings ranges and probability of success lets you focus scarce capacity where the combination of impact and feasibility is highest.

It can help you build business cases more quickly. Instead of estimating benefits from scratch for each project, you can use modeled bands informed by similar past events. Finance will still challenge assumptions, but you begin the conversation with data that reflects real history rather than guesswork.

It can also guide the sourcing approach. Some situations merit a full competitive event. Others might be better served by a targeted renegotiation, a benchmark refresh, or a contract extension. Prediction helps you decide which path is likely to produce enough benefit to justify the time and stakeholder attention required.

Starting with the data you actually have

Many teams hesitate because their data is not perfect. Waiting for perfect data usually means waiting indefinitely. A better approach is to start with what is available and improve over time.

At a minimum, you need a record of past events that includes baseline spend, realized outcome, and a small set of attributes such as category, supplier type, region, and event type. If you also capture contract age and a basic sense of complexity, that is a bonus. Market and benchmark data can be layered in where it exists.

The goal is consistency, not sophistication. A small, clean dataset is more useful than a large, messy one. As more projects run and more records are added, the quality of predictions improves.

Changing conversations with stakeholders and Finance

Once you have even a basic predictive view, the tone of internal discussions starts to shift. With Finance, procurement can say, “For the last set of events that looked like this, here is the range of outcomes we saw,” and use that history to frame targets and recognition rules. That feels different from asking them to accept a single-point estimate based on judgment alone.

With business stakeholders, you can share a portfolio view. If they support a certain set of projects, here is the likely range of benefit and timing. That helps them decide where to engage first and what to defer, based on their own priorities and constraints. It also makes tradeoffs more transparent.

At the leadership level, sourcing plans can be presented as an ROI roadmap. Instead of a list of categories, you can show predicted value by quarter, by theme, or by strategic objective. Over time, you can also compare predicted results to actuals and refine both the model and the way you communicate impact.

Guardrails that keep predictive models useful

A few simple practices help keep predictive modeling grounded.

  • Treat predictions as ranges, not guarantees
  • Refresh assumptions regularly as new outcomes come in
  • Be transparent about which factors drive the estimates
  • Leave room for judgment when unique situations arise

These guardrails make the model a decision support tool rather than a rigid answer engine.

A practical step toward more advanced tools

Over time, predictive modeling for sourcing outcomes will be embedded in more advanced platforms and AI tools. Those systems will bring greater speed, more automation, and tighter integration with external data. Many procurement teams will eventually use them.

In the meantime, building a basic predictive approach with the data you already have is a realistic step. It helps you quantify ROI faster, make better choices about where to focus, and have more confident conversations with Finance and stakeholders. When you are ready to adopt more sophisticated tools, you will already have the mindset, the data habits, and the internal credibility to get real value from them.

Procurement Managed Services: Plug-and-play capacity without building in-house

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January is when procurement teams get a fresh list of priorities and, often, an unchanged or disadvantageous org chart. New savings targets. New stakeholder asks. More urgency. The same number of people (or fewer)

That is why procurement managed services keeps coming back. Certainly not because it is trendy, but because it deals with the part no one can talk their way around: throughput. How much work can your team actually push through the source-to-pay process without quality slipping or stakeholders losing patience?

Here is a realistic scenario. It is mid-February. A business unit flags a wave of contracts expiring in the next 90 days. At the same time, Finance asks procurement to “move faster” on a list of categories tied to the year’s savings goal. Then Legal changes language in a standard template, which means a bunch of agreements already in flight need a quick re-route. Nobody individually caused the pileup, but many organizations end up just like this due to incremental systemic shifts.

When markets are calm, teams sometimes patch the gap with late nights and a few favors. In a volatile year, that becomes the operating model. Stakeholders still buy. They just stop waiting.

Capacity becomes strategy when it is measured

A lot of procurement conversations start with headcount. Should we hire? Should we bring in contractors? Should we restructure?

Those can be valid moves, but outcomes are the better starting point. What needs to get done, how fast, and how consistently?

For the sake of illustration, here are a few metrics usually cut through the noise:

  • Cycle time from intake to award
  • Sourcing events completed per month
  • Contract turnaround time for common agreements
  • Compliance to preferred suppliers and buying channels

If those move, procurement becomes easier to work with, adoption improves, savings is less dependent on heroics, and supplier risk management gets more proactive.

Where managed services often fails is simple. The program tracks activity, not outcomes. You get lots of motion, and the business still complains that nothing is getting done.

What procurement managed services actually is

Procurement managed services is a standing delivery capability that runs inside your environment…with your P2P platform, your intake process, your approval paths, your policy, etc. It is designed to be “always on” rather than a one-time project.

It typically covers work that is steady, repeatable, and high enough volume that it creates real drag when the team is stretched. The scope depends on your operating model, but common areas include:

  • Intake and triage, including intake-to-procure workflows and stakeholder routing
  • Tactical buys
  • Strategic sourcing execution for defined categories and tail spend management
  • Supplier onboarding support and supplier management activities
  • Contract management support, including template coordination and routing

The scope of these activities needs to be clear. If the engagement is vague, it usually turns into staff augmentation under another name.

Where it tends to work best

Most organizations do not need managed services everywhere. They need it where the gap between demand and capacity is persistent, and where inconsistent execution is creating real business friction.

One common trigger is a backlog that never really goes away. Intake builds up, stakeholders get used to waiting, and “quick buys” creep back in. Tail spend grows. Then procurement gets blamed for low compliance, even though the root problem is that the system is too slow to use.

Another is when procurement has a strong savings pipeline but cannot execute fast enough to realize it. The plan assumes a certain number of sourcing events per month. The calendar and reality say otherwise. This is where outcome-led managed procurement services can be a force multiplier, because it converts plans into throughput.

There is also a benefit many underestimate: stakeholder experience. When internal customers do not know what to expect, they work around procurement. When there is a clear intake channel, predictable cycle times, and a team that responds quickly, behavior changes. This is how compliance improves without having to “police” people.

How to buy it without buying disappointment

If you are evaluating procurement managed services, start small and make it measurable. Pick a handful of outcomes that matter, define what “done” means, and build the model around those outputs.

A few decisions matter more than the rest:

  • Define service levels up front, including cycle time targets and volume assumptions
  • Make swim lanes explicit between internal procurement, Legal, Finance, and the managed team
  • Set a weekly prioritization cadence and a monthly value review cadence
  • Require documentation and playbooks as deliverables so process knowledge compounds over time

One small tangent that is worth calling out. Tools do not fix this on their own. A new intake workflow or a shiny source-to-pay upgrade can help, but only if someone runs the process with discipline. Many procurement teams already have solid procurement technology. What they lack is enough capacity to consistently operate it well.

If your 2026 plan assumes faster execution without adding headcount, managed procurement services is a lever worth taking seriously. Capacity becomes strategy when it is tied to outcomes you can measure, govern, and improve.

Tag Archive for: Sourcing Execution

How to Optimize Marketing Sourcing

The most critical step in transformation is to evaluate the roots of the of existing capability.

Logistics Sourcing Why Procurement Should Lead The Way

The most critical step in transformation is to evaluate the roots of the of existing capability.
 

Tag Archive for: Sourcing Execution

Sourcing Achieves Savings for Environmental Services Provider

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Delivering strategic sourcing savings with the adoption of a
new strategic sourcing model and best-practices training.Service Company present in more than 550 communities across North America, leveraging a complex relationship between water, waste and energy to solve environmental challenges and help customers reach their goalsThis project was to launch for ten months several strategic sourcing activities with a scope of roughly 15 Direct and Indirect industrial type categories. The expected deliverables were to deliver at minimum 10% savings, to develop the corresponding strategic sourcing position papers and to train the procurement team on strategic sourcing methodologies.The collection of spend data was especially difficult without any existing P2P tool or adapted processes in place. The fragmented supplier base made it hard to build an external and internal overview cross the different information systems. Last, the lack of strategic supplier or category papers obliged the team to start with basic data collection, aggregation of spend by main categories and suppliers to build step by step an executable action plan.

Our overall approach was to address the spend analysis, to define executable addressable sourcing waves, to deliver savings, and to train the team on strategic sourcing processes. Each of the work-streams were delivered using best practices in strategic sourcing, change management and training.

The various business users and key stakeholders were enthusiastic about the training programs and to learn more about best in class strategic sourcing practices. All of the addressed spend categories had a defined action plan with a new preferred supplier network and the financial results were above target with 16% savings across the addressable spend.

The project delivered a well-balanced approach to both adoption of process change and achievement of new cost savings.