What is Strategic Sourcing in Procurement?
Strategic sourcing is the process of identifying and selecting suppliers that offer the best value for the company. The strategic sourcing process includes analyzing the company’s spend, identifying potential suppliers, negotiating contracts, and managing supplier relationships.
It is a non-traditional way of sourcing in which companies influences factors such as value, relationships, and costs. Strategic sourcing helps companies with cost management, supplier relationship management, and calibration of sourcing with business goals.
However, like everything, it also has some challenges, like overseeing the whole process, controlling cost and margins, forecasting the demands, and managing suppliers.
Finally, strategic sourcing improves business relationships with vendors, aligns the supply chain, reduces risk, and produces stability in daily business operations.
Process of Strategic Sourcing:-
- Defining your business budget
- Crafting a strategy for strategic sourcing
- Researching about vendors and choosing the right one for your business
- Overseeing the performance
- Integrating supplier relationship management
