Strategic sourcing is one of those terms that everyone knows, but not everyone fully understands. Like many unfamiliar terms, it can seem unnecessarily vague and information on it is scattered – either too specific, or too dense to just jump right in. Luckily, we understand that concern and we aim to clear up the worst confusion right away and get you started.
Strategic sourcing is key to all businesses, regardless of the industry. Effectively, it's a means of planning a tactical approach to procurement (indirect or direct), or the supply chain management process of your company. This means constantly looking for ways to improve – whether it's streamlining processes, researching and refining partner services, or evaluating your purchasing activities in order to reduce costs. It's about efficiency, and efficiency is vital to all operations, especially as the business world becomes more intricate.
A lot of research goes into a solid sourcing plan, as it well should. Without all the goods and services you use day-to-day, your business simply can't survive without a tactical procurement plan. In a time where we're all trying to cut down on inefficiencies and spend bleeds, it's time to look at our strategical options and wonder if we can't improve our own plans.
As time marches on in an ever-changing market, flexibility and adaptability have become more influential to our business decisions. Because of this, many companies have started outsourcing their procurement model to professionals who dedicate themselves solely to coming up with the best strategic sourcing models they can. Many companies simply don't have the resources to handle an efficient and effective procurement department themselves, and by outsourcing, are able to keep their valuable staff focused on revenue-generating activities. The beauty of an outsourced service provider is that they will not only manage your suppliers, but also track their performance in order to minimize any risk to you and ensure they get only the best. Consider a team of highly trained experts who live and breathe strategic sourcing, who are always on the cutting edge and have real-time market insights.
Understandably, a lot of companies can be uncomfortable with the idea of completely outsourcing such an important aspect of their business, and that's where sourcing consultants comes in. Instead of going to them, have a strategic sourcing expert come to you in the form of a contingent worker who can offer you the benefit of their expertise, while you maintain full control over the entire operation. They will come equipped with all the information, education, technology and resources you will need, which is not only more cost-effective but less resource intensive. Requiring their presence only when new processes need to be made, means you don't have to concern yourself with a full-time employee, which makes it an ideal solution for not just large businesses, but for small businesses and start-ups alike.
Also to be considered is vendor management software, a popular option for companies that prefer to keep things in-house and like organized systems. The automation of the process can often help streamline every aspect of strategic sourcing, making it easy for only a few employees to handle everything. Having a central repository for all information enables you to see the big picture in a simple way, allowing you to analyze risk assessment, security and pricing policies, contracts and more from one area. It can also make it easier to avoid costly errors, reducing spend in both administration and labor costs, as well as ensuring you're safer from any compliance laws that need to be considered. In this way, strategic sourcing can be made more efficient, and you can focus on the things that matter most.