Procurement is transforming into a more strategic function. Organizations need to adopt efficient strategic sourcing skills and processes to maximize business performance. To better understand the Strategic Sourcing process, let us discuss some of the key factors below:
- Market Research – One of the crucial part of Strategic Sourcing is having a clear understanding of the market and available resources. Market research is critical not only for the procurement of new goods and services but also for the consolidation of vendors who may have overlapping offerings.
- Analytics – Analytics plays an important role in strategic sourcing analysis. Elements of the sourcing strategy and associated operations require periodic assessment. Continued analysis of the spending strategy is one of the defining element of Strategic Sourcing.
- Forecasting – Forecasting is an essential component of Strategic Sourcing. It involves planning the procurement and delivery of goods and services to the required address. Forecasting is generally done periodically and reassessed frequently to monitor performance against the plan.
- Category Management – For strategic sourcing, it is always essential to categorize all goods or services based on similar characteristics. Strategic sourcing analysis includes the categorization of goods and services as well as defining the budget centers for different departments.
- Supplier Management – While procurement generally handles the tactical, day-to-day encounters with suppliers (purchase order management, for instance), Strategic Sourcing is generally responsible for the management of suppliers at the macro level. Categorizing, consolidating, negotiating, etc.
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