You Sure Didn’t Realize these Benefits of Strategic Sourcing

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You Sure Didn’t Realize these Benefits of Strategic Sourcing

 You Sure Didn’t Realize these Benefits of Strategic Sourcing

In this article, you will learn about the various benefits of strategic sourcing and why it is worth any investment for emerging organizations. We’ll discuss an overview of ‘Strategic decision making on future sourcing projects.’

Strategic sourcing helps enterprises identify, evaluate, negotiate, and implement the optimal mix of goods and services.

The Sourcing Cycle

Today, enterprise competition is not limited to the assets but also intellectual property rights, customer, and supplier relationship. Apple and Walmart serve as good examples. With political instability and natural calamities, the business environment is experiencing extreme volatility like never before. Along with the two challenges, globalization also complicates effective sourcing for an organization.

Role of Procurement: Strategic Sourcing

Contrary to the popular notion, procurement’s role is not about sourcing from a low-cost supplier or conduct a reverse auction to award a bid. Procurement’s role has evolved. It has to look out for global suppliers globally and evaluate their offers at the best interest of the organization. Here, it is a shift into strategic sourcing with minimal supply chain disruptions.

Four Steps: Strategic Sourcing Objectives
Obtain Spend Visibility

Spend visibility is a prerequisite for organizations to proceed with their sourcing requirements. With visibility into the actual spend, sourcing teams can plan their purchases in the best possible way. Spend visibility is achievable if organizations meet the next objective.

Analyze Existing Spend

Once organizations get visibility into their spend, the next step involves analyzing the spend. This is the second crucial step before organizations start inviting bids from the suppliers.

Decide Contract Post-Bidding

Suppliers can provide the best possible bid without pre-decided contracting terms. This method brings to the table multiple options for the buyer to choose from.

Technology to Analyze Bids

After bidding is done, the next step is to analyze them and award the contracts through superior technology. As a result of this, organizations can analyze bids not just on the price parameter but also on maintenance, service, delivery terms, etc.

Conclusion

Awarding contracts is the way to culminate the sourcing process. A successful sourcing process can never be completed without the process of creating and managing contracts. And so in my next article, I’ll discuss an overview of the contract management system.

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