Strategic sourcing, a method of supply chain management, entails standardising the collection and analysis of relevant data in order to help businesses leverage their combined buying power to secure the best deals available and better align their procurement efforts with overall organisational objectives. Strategic sourcing advisors help businesses with their purchasing and supply chains. Their responsibilities include liaising with vendors and suppliers to negotiate contracts and enhance procedures involving the receipt of parts and inventories. They also provide technical expertise to develop the statement of work and design the performance criteria.
How does it functions
Using strategic sourcing, companies can improve their procurement procedures to be more thoughtful and comprehensive, rather than solely focusing on cost. Instead, with the help of a good sourcing strategy, they may build a system that can easily adjust to new circumstances and increase the company’s worth. First, the company’s requirements and past expenditures are examined; secondly, a strategic plan is developed; and last, data is gathered and analysed to help choose a vendor pool.
After the initial phases of selection and negotiation are complete, strategic sourcing moves on to the measurement of performance and the on-going optimization of the process. Large companies with multiple suppliers sometimes employ strategic sourcing. Companies who would rather have a trained outsider handle their strategic sourcing needs can do so by utilising one of the many companies that offer outsourcing services for this purpose.
However, a consulting firm popularised a seven-step framework for the strategic sourcing process that is widely used today. The following are some examples:
- Examine the company’s spending habits, the kind of products it buys, and the divisions and processes it uses.
- Create a plan for acquiring goods and services that serves organisational objectives.
- Evaluate the supply chain and compile a list of potential vendors.
- Establish criteria and models for requesting bids.
- Talk to potential vendors and make a choice.
- Bring in new vendors or outsourced partners and incorporate them into on-going procedures.
- Maintain a close eye on key performance indicators and adjust your sourcing strategy as required.
- Strategic sourcing’s primary benefit is lower overall costs, but there are many other upsides to rethinking the sourcing procedure. As companies make use of the plethora of data at their disposal and the digitization of business operations, procurement is a sector primed for innovation. The majority of companies improving internal sourcing processes is why they’ve decided to invest in a strategic sourcing Advisor, as stated by some of the experts of the Strategic Sourcing Advisor. Sixty-five per cent of businesses cited cost savings as a primary motivation for adopting strategic sourcing, while sixty-one per cent cited greater productivity as a result of automation.
- By learning more about the dynamics of the supplier market, companies may better anticipate and prepare for any threats. Moreover, the supply chain’s emphasis on continual development and sustainability increases its adaptability and responsiveness to outside influences.
- Strategic sourcing has a long-term impact on supply chain efficiency because it helps establish and maintain productive partnerships with suppliers and outsourcers, pinpoints areas for growth, and provides justification for making adjustments.
Now you have better knowledge about Strategic Sourcing and its benefits . Strategic sourcing is being used by businesses as a means to better manage their sourcing needs and be more proactive in the face of supply chain interruptions. Organizations can maximise performance and gain a competitive edge by matching company goals and requirements with the right suppliers who have the relevant capabilities. Business units can also improve their purchasing practices by employing automation technology for strategic sourcing. Strategic sourcing is here to stay because it reduces spending without sacrificing quality.