What is Strategic Sourcing?
Strategic Sourcing is a method of sourcing that applies various strategies while sourcing different products and services. The investors in this increasing competition and the technological environment, are more focused on investing in supplier management and relationships.
The different types of strategic sourcing are Outsourcing, Low-cost Country sourcing, Global sourcing and crowdsourcing. Strategic sourcing boosts the quality and efficiency by building a strong and multiple supply base for an organisation. It is a joint process that permits an enterprise to align its purchasing power with the overall value proposition.
What are the Advantages of Strategic Sourcing for Buyers and Sellers?
Some of the benefits of strategic sourcing for buyers are:
1. Enhanced and Advanced Futuristic Guidelines
Businesses can collect data and make better choices by using strategic methods. This will help them achieve a successful outcome.
2. Proper Management of Supply Chain in Business
Strategic sourcing can help in improving relationships with multiple enterprises. The supply chain is adequately managed through a business that protects the relationships of the enterprise with all the related organisations.
3. A Systematic Organization
By way of strategic sourcing, businesses can focus more on long-term planning for business development. The business persons with the help of strategic sourcing will be able to focus more on the future challenges of the enterprise.
4. Removing Uncertainties from the Business
If there is a close relationship with the supplier, businesses can quickly identify and solve any potential issues.
Some of the benefits for the suppliers are:
5. Control the Costs with Proper Management:
Through strategic sourcing, the suppliers can sell a significant portion of their production. This will help them in better planning and also manage the long term visibility of cash flow.
The strategic sourcing will lead to a collaboration of the suppliers. Choosing a single supplier instead of multiple suppliers will bring more stability in the daily operations of the enterprise.
What are the Best Practices for Strategic Sourcing?
The best practices that can be adopted for strategic sourcing are:
1. Using Electronic Tender and Auction Methods:
Through eTendering, the buyers can easily calculate and evaluate the distribution, creation and storage of tenders. Electronic tendering is very efficient in comparison to manually managing the tender.
2. Using software for Contract Management
The software for managing contracts helps in managing numerous contracts. If businesses fail to manage the supplier agreements using appropriate tools, it can reduce the prices and the service terms of the contract.
3. Track the Expenses and Savings
If an enterprise has a savings tracker solution, it will help to record your savings. You can easily forecast your value by evaluating the documents and reports in the tracker.
What is the Process for Strategic Sourcing?
The process of strategic sourcing has been divided into seven steps. The seven steps for strategic sourcing are as follows:
- Study the categories of products that are used by businesses. Also, have a look at the spending pattern of the businesses. Make a record of the process and even the involved departments.
- Create a strategy for sourcing based on the goals of the business.
- Prepare a portfolio of suppliers and their market.
- Define the proposal request and create templates for the same.
- Discuss with the selected suppliers.
- Integrate the suppliers into the existing process or add new vendors or outsource the providers.
- Keep a track on the performance metrics and then improvise the sourcing plan as per the need and analysis.
What is the Ultimate Outlook of the Process of Strategic Sourcing?
The ultimate outlook for the process of strategic sourcing are:
- Define all the Category and Arrange the Sections
- Analysis of the Supply Market
- Create a Proper Strategy
- Develop a Strategy for Sourcing
- Select Suppliers Through Negotiation
- Implementation and Integration of Policies
- Track the Results and Note Them
Many organisations are adopting strategic sourcing methods to establish a comprehensive approach to manage the requirements of sourcing. It helps in building a proactive approach to many supply chain disturbances. The business goals and its requirements are correctly aligned to the appropriate and right suppliers having significant capabilities. The enterprises improve their performance and also gain on a competitive front over their peers. Further, by obtaining automation technology for strategic sourcing, the business units get more empowered to manage their sourcing. It is integrating the blockchain in the supply chain to increase visibility and accuracy in many cases. Contact us for more details.