GTS Blog

How to Find Value in Strategic Sourcing

Posted by Ascent Global Logistics on Mar 29, 2017 6:05:29 PM


Supply chain optimization is all about analyzing each part of the chain, and finding solutions that enable each part to do its job faster and more economically. So what is strategic sourcing?

“Strategic sourcing is an approach to supply chain management that formalizes the way information is gathered and used so that an organization can leverage its consolidated purchasing power to find the best possible values in the marketplace.”

Here are the common steps of strategic sourcing:

  1. Data collection and spend analysis
  2. Market research
  3. The RFx process (also known as go-to-market).
  4. Negotiations
  5. Contracting
  6. Implementation and continuous improvement

Basically, these efforts are made as a way to find hard and soft dollar savings in the supply chain. The goal is to connect a company’s operational base to its business aspirations. The best way to do this is to build rapport with suppliers as early on in the product development process as possible.

For example, letting the supplier in on product development before it is established, instead of creating something in-house and then sharing it with suppliers and receiving back their improvement ideas. In fact, the whole mindset around suppliers should shift from mere providers of products and services to the owners of unique capabilities that you could obtain from them. This keeps you asset-light and improves your flexibility.

Strategic sourcing is different from conventional purchasing because it places emphasis on the entire life-cycle of a product, not just the initial purchase price. The end goal, as stated above, is flexibility.

So, what are the first steps in strategic sourcing? Ask these three questions:

  1. Where are we? How effective and efficient are our current capabilities?
  2. Where could we be? What are the incremental opportunities?
  3. How can we get there? What is the roadmap that will allow us to move forward?

After discovering the answers to those questions within your supply chain, consider the continuous progress your strategic sourcing should experience:

• Balancing internal & external activities, services and know-how

• Aligning business strategy, business processes and IT services

• Balancing the results that must be achieved, and the future options available


Does your company practice strategic sourcing? Would you add any tips for strategy and implementation? Leave them in a comment below!

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Topics: Supply Chain