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.
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.
The immediate tangible benefit of strategic sourcing is greater cost savings.
When an enterprise can align sourcing strategies/activities to its organizational goals and objectives, business performance and risk mitigation capabilities get a boost.
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.
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.