In this modern era, it is paramount for businesses to stay on top of their game without exceeding their budget. This can be obtained by strategic sourcing.
What is it?
Simply put, strategic sourcing is the most successful process that promises efficiencies across all types of spend categories, trims down supply risks, ensures long-lasting relationships with suppliers, maximizes operational efficiency, and boosts profit graph.
Agree with the benefits of strategic sourcing, but don’t know whether it is better than traditional sourcing or not? Well, this table will clear all your doubts and help you see the bigger picture:
In the long run, strategic sourcing has an upper hand over tactical sourcing, and the table shows the same. So, it’s better to learn how you should prepare for the future while considering strategic sourcing. Let’s roll now:
- Analyze spend areas for a better course of action
To get better results with the help of strategic sourcing, it is imperative to analyze all spend areas of your business. Once done, decide which spend area is critical and which one is non-critical. By doing this, you will be able to prioritize sourcing activities effortlessly.
To leave no stone unturned, you can go one step further by doing categorization. It signifies analyzing your domestic, foreign, direct, and indirect spending.
After this, it would be easier for you to mitigate potential risks related to the chosen spend categories, set priorities flawlessly, and come up with result-oriented strategies.
- Be acquainted with the supply market
Well, if you see a future with strategic sourcing, it is vital to be aware of the supply market. When you get familiar with the cost elements of the selected products or services, it gets easier to make the right decisions.
You shouldn’t take this lightly because once you know the actual raw material prices, labor costs, transportation expenses, etc. then you are likely to join forces with the right supplier.
- Choosing the right procurement platform
From the business point of view, performing extensive research to identify the right procurement platform is instrumental. At present, multiple options are available to choose from. However, this is not the only thing that leaves you scratching your head, as there are multiple factors to be considered. Such as pricing, scalability, integration options, etc.
Is there any solution?
Here’s what you should look for while searching for a trustworthy Esourcing platform:
Centralized dashboard: An intuitive dashboard that offers all information related to suppliers and crucial activities at once is significant to make the most out of strategic sourcing.
Powerful spend analytics: Make sure the selected procurement platform offers insights into vendor performance. Your decisions improve significantly when you have precise data related to delivered orders, delivery quality, etc.
Report generation: Team meetings often result in sheer wastage of time and efforts when they are conducted without any solid information. Therefore, it is crucial to choose an Esourcing platform that generates presentation-ready reports based on different parameters in a jiffy.
Got a feeling that finding such a feature-rich platform would be an arduous task for you? Well, you can give it a try to Procol, an all-in-one procurement software solution provider.
Keep a close eye on your supplier’s performance
Joining hands with a reliable supplier only gets half the job done. For the rest, you must keep a tab over your supplier’s performance to ensure that everything is going in an expected manner. Don’t neglect this, because it could harm your business’s bottom line in the later stages.
Usually, those businesses deal with unnecessary losses, which drop their guard down while monitoring supply chain disruptions. Consequently, they fail to get all the benefits of strategic sourcing.
Hence, it is fundamental to keep checking your supplier’s performance at regular intervals. In case you find trivial issues, fix them straight away. Otherwise, they will turn into a hassle and take your business off the track.
All in all, keep one thing in mind that there’s always room for improvement, thereby resting on laurels isn’t even an option, especially when you want to reach the No.1 position in the market.
Final few words:
While reading this article, you must have got the hint that strategic sourcing is being embraced by organizations, because it promises significant cost savings and facilitates the handling of sourcing requirements.
By means of strategic sourcing, businesses can easily accomplish their objectives as it allows them to partner with trustworthy suppliers possessing the required capabilities, experience, and workforce to carry out certain tasks.
Besides shedding light on the importance of strategic sourcing, we’ve shown a comparison table to help you understand why it is better than tactical sourcing. In addition, we’ve discussed some key factors that you should keep in mind while preparing for strategic sourcing.
We hope that this write-up has offered you crucial insights into strategic sourcing. And it would be great if you enter your email address in the below-given field and subscribe to our newsletters for more awesome and detailed articles like this one.
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