What Is Strategic Sourcing in Supply Chain Management?
Strategic sourcing is a process of identifying, evaluating, and selecting suppliers to meet an organization’s needs. It is a proactive approach to sourcing that takes into account the organization’s overall business goals and objectives.
Strategic Sourcing Key Aspects
- Category management: Category management is the process of grouping related goods and services into categories. This helps organizations to better understand their spending and to identify opportunities for savings.
- Market research: Market research involves gathering information about potential suppliers and the market for the goods and services that the organization needs. This information can be used to identify the best suppliers and to negotiate favorable contracts.
- Supplier selection: Supplier selection is the process of evaluating potential suppliers and selecting the ones that best meet the organization’s needs. This process should take into account a variety of factors, such as price, quality, delivery, and financial stability.
- Contract management: Contract management involves negotiating and managing contracts with suppliers. This is an important step in ensuring that the organization gets the best possible value for its money.
- Supplier relationship management: Supplier relationship management (SRM) is the process of building and maintaining relationships with suppliers. This is important for ensuring that the organization has a reliable supply chain and that it can get the best possible value from its suppliers.
Strategic Sourcing Benefits
- Cost savings: Strategic sourcing can help organizations to save money by identifying and eliminating inefficiencies in their supply chains. It can also help organizations to negotiate better prices with their suppliers.
- Improved quality: Strategic sourcing can help organizations to improve the quality of the goods and services that they receive from their suppliers. This is done by selecting suppliers that have a good reputation for quality and by working with them to improve their processes.
- Reduced risk: Strategic sourcing can help organizations to reduce the risk of supply chain disruptions. This is done by diversifying the organization’s supplier base and by working with suppliers that have a good track record of reliability.
- Increased innovation: Strategic sourcing can help organizations to increase innovation by working with suppliers to develop new products and services.
Overall, strategic sourcing is a valuable tool that can help organizations to improve their bottom line and to achieve their business goals.
Negotiation and Procurement Quotes
- “Organizational Procurement is a tight balancing act between “cost and quality” on one side and “time and compliance” on the other side, yet a seasoned procurement specialist keeps it evenly balanced.” ~Victor Manan Nyambala
- “A stronger dollar increases U.S. dollar purchasing power.” ~Steve Mnuchin
- “Don’t rush in and make large purchases without doing your homework. Research is your friend.” ~Dave Waters
- “Buying a product or a service is not procurement, that is purchasing. “Procurement” is more multifaceted! “Procurement” will assess needs, define requirements, comb the market and onboard vendors against set criteria. “Procurement” solicits for proposals in formal fashion and allows for a fair, competitive, and ethical environment. “Procurement” contracts based on value for money and maintains full accountability and transparency. To deliver goods and services in the right quality, from the right source, at the right price, to the right destination, at the right time, in the right quantity, and in the right way is not purchasing. The portfolio of strategies required to deliver value for money can be summed up in one word “procurement!? ~Victor Manan Nyambala
- “Requiring the Fed to focus on preserving the purchasing power of the dollar will create a solid foundation for economic growth.” ~Kevin Brady
