09 Jun 16
All You Need To Know About Strategic Sourcing
Strategic Sourcing Process is an organised procurement approach that companies use to assess, re-evaluate, and upgrade their supply chain management system. This is done so that the organisation can use its consolidated purchasing power to fish out the best deals in the market.
Strategic sourcing analyses what a firm buys, its source, its price, and at what quantity/volume. This process of procuring is different from a conventional purchase. This is because it focuses on the entire life process of the product, and not just its initial market price.
The word ‘Strategic Sourcing’ was made popular by several blue chip companies via various consulting companies during the late 80’s and early 90’s. This methodology has since become a standard procurement procedure in large and sophisticated firms.
This article will brief you on the processes involved strategic sourcing.
How Does The Sourcing Plan Work?
Developing a sourcing strategy involves extensive planning and strategizing. Factors like the requirement, specifications of all materials, negotiations (buying price/cost goals), the sourcing team, and the RFX steps like RFP, RFQ, and RFI are involved in the sourcing plan. The aim of this plan is to handle quality and time of all sourcing events pertaining to strategic sourcing.
Strategic Source In Cooperative Sourcing
Cooperative sourcing is a conglomeration of different firms having similar operational processes. The competitors with the best production function can obtain the business strategies and processes of other firms, to cut costs. It’s common to find this practice in IT/ITES sector, because of low variable costs.
Almost all the negotiators in a cooperative sourcing can be insourcers or outsourcers, and due to this, it could become tough to strike a balance in this collaboration. So, organisations focus on selecting a company with a strong production function. However, even this becomes tough to handle. Because the actual production costs are difficult to estimate, and the negotiators may get tempted to project their actual costs way higher than they are.
Every firm, by devoting itself to the rules of strategic sourcing, can make procuring a cost-effective business deal. Reputed organisations like Volantis Technologies Pvt. Ltd. offer their clients ultra-modern and sophisticated ways of strategic sourcing, which can prove to be vital in enhancing the productivity of the company.