Strategic Sourcing is a proven approach for executing sourcing projects. During every step the emphasis is to make decisions based on market intelligence and analytical rigor. The objective is to optimize the supply base and achieve reduction in Total Cost of Ownership so as to improve long term competitiveness of an organization.
To define strategic Sourcing, the simpler approach is to answer and list out how traditional procurement is different when compared with Strategic Sourcing. For both the end objective is to buy goods and services for the organization or to buy goods and services for the internal client group or the user group within the organization.
The key difference between the two processes is the method adopted as well as the end results.
|#||Traditional Procurement||Strategic Sourcing|
|1||Process led by internal client group or user department, low procurement involvement||Process managed and coordinated by procurement department|
|2||Decentralized buying by multiple units or departments||Spend consolidation, leveraged buying|
|3||Supplier base is high||Supplier base is rationalized|
|4||Alternatives are not explored||Thorough supplier evaluation is conducted before finalizing|
|5||Adhoc purchasing process, is time consuming and complex||Standardized and digitized purchasing process, with use of best practices|
|6||Decision making is based on perception or gut feel, use of market data is very limited||Proven approach, based on data driven decision making|
|7||Only high level cost evaluation is conducted||Thorough TCO analysis is conducted|
|8||Informal deals and low use of contracts||After strong RFP process, formal contracts are prepared|
|9||Results are usually very weak||Strong results are continuously tracked and analyzed|
All the points listed above may or may not apply for many companies, but some of them may be applicable. Over the period of time EmpoweringCPO has mastered the art, and is considered among leading Strategic Sourcing companies.
We at EmpoweringCPO provide all the analytical horse power and market intelligence required to execute a sourcing project. Our deliverables are in form of excel based models and power point decks at each stage of the process. The objective is to empower the onsite category managers to control the process and influence the client group so as to achieve the desired results. Our deliverables are as follows:
Contact us to know more about EmpoweringCPO, one of the leading strategic sourcing consulting firms globally. We are also one of the top procurement consulting companies with worldwide presence. Contact us to know more about our capabilities, expertise and case studies. Our strategic sourcing consultants can initiate a pilot project to demonstrate and achieve real savings.
Sign up now for our blogs and infographics for the latest insights on procurement and strategic sourcing.