The first step in strategic sourcing is to identify spending areas. Once you have identified spending areas, you need to categorize them according to their importance. This will help you prioritize sourcing activities. Once you have defined areas of criticality, you can then focus your sourcing activities accordingly. In this way, you will be able to find suppliers who can provide you with the quality products you need at a price you can afford.
Increasing consumer demands
Strategic sourcing is a multi-faceted process that leverages comprehensive spend analysis, supplier evaluation, and supplier relationship management with detailed market research. It is an ongoing process and requires skilled personnel, relevant technology platforms, and tools. However, it is an invaluable resource for companies that want to boost the performance of their supply chains, improve efficiency and lower costs.
Strategic sourcing is a proactive evaluation process that focuses on creating a long-term plan and minimizing supply chain risk. It sees suppliers as essential value partners and aims to establish sustainable collaborative relationships with them. Strategic sourcing also aims to optimize supplier selection and improve supplier relationships throughout the vendor’s lifecycle.
Growing supply chain complexity
Managing the ever-growing complexity of supply chains is no small task. But it can be accomplished if companies embrace change. Adapting to supply chain complexity can differentiate your business and give you the edge over your competitors.
The first step is to understand your organization’s supply chain. Strategic sourcing involves thoroughly analyzing your total costs by department and category. Next, you must understand how this cost affects your business and how to reduce it. Strategic sourcing can also increase the productivity of your procurement process.
Increasing cost savings
Strategic sourcing helps companies cut costs by improving supplier coordination and efficiency. It also reduces the manual processes of purchasing goods and services and enhances supplier relationships. Companies can achieve higher cost savings when their suppliers deliver superior quality products and services on time. These benefits can translate into higher revenue potential and improved top-line metrics.
Strategic sourcing also streamlines long-term procurement. It makes it possible for companies to conduct competitive bidding and ensure optimal supplier selection, resulting in substantial savings. But despite its numerous benefits, companies often fail to realize their savings because sourcing and procurement teams are tasked with only a small fraction of overall spending. This is because sourcing events are typically not transparent and are often poorly executed. By using strategic sourcing, companies can avoid leakage of savings. To start a successful strategic sourcing program, companies must analyze their spending data.
