What is the simple strategy behind sourcing?

The simple strategy behind sourcing is to reduce the input cost of raw materials while increasing quality and performance. It is the process that can be accomplished by carefully evaluating suppliers and selecting those that offer the best value.

Strategic sourcing is a procurement process that considers all aspects of the product life cycle, from initial design to post-purchase support. It is a holistic approach that considers cost, quality, delivery, and other factors to ensure that the best possible product is procured for the lowest possible price.

Strategic sourcing can be a powerful tool for procurement professionals when done correctly. It helps in significant cost savings, improved product quality, and enhanced supplier relationships when done correctly. However, it is essential to remember that complex process requires careful planning and execution. While most enterprises believe that digital technology will transform procurement, only one-third have access to digital strategy. Even fewer have the resources for a digital transformation. So, where do you start?

It’s a simple 4-word process to create a Sourcing Plan.

• A sourcing plan aims to create a road map that outlines the steps necessary to achieve your desired outcome. This could be anything from reducing costs by 10% to improving supplier quality by 25%. To create an effective sourcing plan, you need to understand your current situation first. This means taking a close look at your spending data and understanding where your money is going. Once you have a good grasp of your current state, you can identify areas of opportunity.
• Once you’ve identified potential areas for improvement, you can begin to develop strategies for achieving your goals. This is where your knowledge of the marketplace and suppliers comes into play. You’ll need to assess the risks and opportunities associated with each potential.
• Knowing your supplier base and understanding their capabilities is essential to developing an effective sourcing strategy. When evaluating suppliers, you should consider their financial stability, manufacturing capabilities, quality control procedures, and delivery performance. Once you’ve identified a few potential suppliers, it’s time to begin the negotiation process.
• The goal of negotiations is to reach an agreement that is mutually beneficial for both parties. To do this, you need to have a clear understanding of your needs and the supplier’s capabilities and objectives. It’s also important to remember that the negotiation process is ongoing and should be revisited on a regular basis.

After you’ve developed your sourcing strategy plan, it’s time to put it into action. This means working with your suppliers to implement the changes necessary to achieve your desired outcome. Depending on the complexity of your plan, this could be a lengthy process. However, if done correctly, it will be well worth the effort.

The benefits of strategic sourcing are significant and can positively impact any organization. Bringing in an expert strategic sourcing partner can help you navigate the process and maximize your speed & savings. So why not give it a try? You may be surprised by the results.

InHouse is one of the trusted strategic sourcing companies. We provide expert sourcing services and solutions that help you develop a sustainable edge in your marketplace. We have a team of highly experienced and knowledgeable sourcing professionals that can help you with all aspects of the strategic sourcing process. Contact us today to learn more about our services and how we can help you achieve your desired outcomes.