What is Strategic Sourcing | Supply Chain Management Principles. -

What is Strategic Sourcing | Supply Chain Management Principles.

Strategic sourcing is a process that organizations use to identify, qualify, and select suppliers for goods and services. It is a long-term approach to procurement that focuses on maximizing value and minimizing risk.

Strategic sourcing is important for supply chain management because it can help organizations to:

Reduce costs: By negotiating better prices with suppliers, organizations can save money on their procurement spend.
Improve quality: By working with suppliers to improve the quality of their products and services, organizations can reduce the risk of defects and recalls.
Increase efficiency: By streamlining the procurement process, organizations can free up resources to focus on other areas of their business.
Mitigate risk: By diversifying their supplier base and building strong relationships with suppliers, organizations can reduce their exposure to risk.
Improve sustainability: By working with suppliers to adopt sustainable practices, organizations can reduce their environmental impact.

Examples of strategic sourcing:

Identify a new supplier for a critical component.
Negotiate a long-term contract with a supplier to get a better price.
Develop a supplier scorecard to evaluate the performance of its suppliers.
Implement a supplier relationship management (SRM) system to improve communication and collaboration with its suppliers.

Strategic sourcing is a complex process that requires a deep understanding of the organization’s needs, the supplier market, and the competitive landscape. However, it can be a valuable tool for organizations that are looking to improve their supply chain performance.

Benefits:

Reduced costs: Help organizations to reduce their costs by negotiating better prices with suppliers, consolidating their spend, and eliminating unnecessary costs.
Improved quality: Help organizations to improve the quality of their products and services by working with suppliers to improve their processes and procedures.
Increased efficiency: Help organizations to increase the efficiency of their procurement process by streamlining it and automating tasks.
Reduced risk: Help organizations to reduce their risk by diversifying their supplier base and building strong relationships with their suppliers.
Improved sustainability: Help organizations to improve their sustainability by working with suppliers to adopt sustainable practices.

If you are looking to improve your supply chain performance, strategic sourcing is a good place to start. By taking a strategic approach to your procurement, you can save money, improve quality, increase efficiency, reduce risk, and improve sustainability.

Supply Chain and Negotiation Quotes

“You must never try to make all the money that’s in a deal. Let the other fellow make some money too, because if you have a reputation for always making all the money, you won’t have many deals.” ~J. Paul Getty
“The single most powerful tool for winning a negotiation is the ability to get up and walk away from the table without a deal.” ~Paul Gauguin
“The single and most dangerous word to be spoken in business is no. The second most dangerous word is yes. It is possible to avoid saying either.” ~Lois Wyse
“Victorious warriors win first and then go to war, while defeated warriors go to war first and then seek to win.” ~Sun Tzu
“Lets go invent tomorrow instead of worrying about what happened yesterday.” ~Steve Jobs
“A well trained procurement organization can add major dollars to the bottom line of an organization.” ~Dave Waters
“Selling is a natural skill. It’s developed as a child. You may know it as persuasion.” ~Jeffrey Gitomer