| Strategic Sourcing is a procurement process that | | | | developing a new sourcing strategy, negotiating with |
| evaluates and assesses the purchasing activities of a | | | | suppliers, implementing the new supply structure and |
| company on an on-going basis. It is considered to be a | | | | tracking the results. This process is cyclical and is |
| part of the supply chain management where the goal | | | | adopted as part of the overall sourcing strategy by |
| is to minimize supply chain costs, while leaving the | | | | many companies. |
| chain intact. | | | | For a successful strategic sourcing, a company needs |
| Strategic Sourcing is a systematic process focused at | | | | to understand and identify the highest impact cost |
| getting maximum advantage of cost, process, quality | | | | reduction opportunities. A thorough review of the |
| and technology, by leveraging the company's buying | | | | expenditures and collection of spend data needs to be |
| power. It is an organized and a collaborative approach | | | | made. After that a savings estimate is made for the |
| to reduce cost while maintaining or improving service | | | | project. So a spend assessment forms the first step |
| and quality. In contrast to traditional sourcing, strategic | | | | into viewing a company's needs, its buying power, and |
| sourcing involves a continuous relationship between | | | | the degree to which they are leveraging that power. |
| buyers and suppliers which is a beneficial collaboration | | | | An effective sourcing methodology needs to be |
| for both parties. It also increases the visibility of the | | | | adopted as a next step. This will address things like |
| entire supply chain via true collaboration. | | | | product specification and hence use the most ideal |
| Strategic sourcing has many advantages like cost | | | | sourcing and negotiation strategy for the product |
| savings, standardized pricing, access to new suppliers | | | | category to achieve the lowest cost. |
| and vendors, increased operational efficiency, set | | | | The next step in the process is to a process for |
| purchasing procedures and a relatively shorter cycle | | | | supplier participation and contract processes. This can |
| time. Savings from strategic sourcing can come from | | | | be done by using technology and esourcing tools |
| various ways like Spend Consolidation, Demand | | | | which greatly assists the process and increases |
| Management, Process Improvement, Competitive | | | | efficiency. After that the selected supplier profile and a |
| Bidding, LCCS, restructuring and developing | | | | strategy is developed followed by the methodology of |
| relationships with suppliers. | | | | implementation. This entire process, strategy and |
| Strategic Sourcing starts from assessing a company's | | | | methodology is then integrated with operations and |
| spend, looking at the supply market, analyzing the cost, | | | | tracked on a regular basis. |
| identifying the suitable vendors and suppliers to | | | | |