What is Strategic Sourcing?

Strategic sourcing is a sourcing method that involves applying different strategies while sourcing products or services. Strategies are selected based on real-time circumstances of each acquisition and influenced by factors such as the value of spend, risk in the category, and the supply market character. 

Crowd sourcing, outsourcing, global sourcing, and low-cost country sourcing are a few of the many types of sourcing strategies. 

Importance of Strategic Sourcing  

Strategic sourcing enables enterprises to find suppliers that meet specifications and do not cause much risk, but at the lowest possible rates. Companies can also develop in-depth profiles of potential suppliers and compare them as required.

Strategic sourcing views suppliers as valuable partners. It helps enterprises to sustain a long-term supplier relationship. 

Strategic sourcing enables enterprises to consolidate purchasing power. Enterprises can thereby ensure a lower cost of ownership and limit the risk factors in its supply chain, which can further make the supply chain sustainable.

What are the Benefits of Strategic Sourcing?  

Increased Savings  

The immediate tangible benefit of strategic sourcing is greater cost savings. 

Adjusting Sources and Business Objectives   

When an enterprise can align sourcing strategies/activities to its organizational goals and objectives, business performance and risk mitigation capabilities get a boost.

Supplier Optimization   

When an enterprise can identify its high-value suppliers, it automatically achieves higher cost savings and is able to retain the quality of products or services.

Long-Term Relations with Suppliers   

Strategic sourcing helps enterprises develop long-term business relationship with suppliers. A sustained relationship not only saves time and resource, but it also leads to performance optimization on part the supplier.