BLOG

Ask Me Anything: 3 Steps to Establish an Excellent Strategic Sourcing Methodology

Oct 4, 2018

In the 21st century, for any company to become a world-class procurement organization, it needs four competencies that will allow it to transfer value through an effective strategic sourcing methodology to the entire supply chain. These four competencies include:

  • Anticipate and meet future demand
  • Focus on customer-driven environment
  • Manage information flow throughout the supply chain
  • Manage goods demand and supply

Many organizations face challenges when it comes to establishing an effective strategic sourcing methodology and are, therefore, unable to boost their performance. An excellent strategic sourcing methodology is one where organizations start looking for quantum savings from their supply chain.  It is characterized by the exchange of real-time data between suppliers and buyers, long-term contracts, and purchasing through multi-functional communication. Many different models exist for building a good strategic sourcing methodology. However, every company that has executed this business philosophy shares certain basic components with their own execution. Generally, this methodology is implemented with the objective of applying purchasing savings to some other aspect of the business. Thus, it is very crucial tContact USo establish a proper sourcing methodology for any organization if it wants to excel in procurement. We, at SpendEdge, have listed out a few essential steps to establish an excellent strategic sourcing methodology.

Steps in a Strategic Sourcing Methodology

Define goals

The first step to an excellent strategic sourcing methodology is to define the goals and objectives of the organization. Identifying the scope and objectives of the program and internal requirements for strategic sourcing is very essential. It helps in determining where and how to spend.  

Analyze internal spending         

The next step involves tracking and analyzing internal spending. This can be accomplished by gathering data from ongoing procurement and accounting systems or by implementing e-procurement throughout the organization. This is the step where identification of new potential vendors is done, new RFI templates are desirequest proposalgned, and the team analyzes the effect of existing long-term agreements.

Develop commodity strategies

The third step involves the development of commodity strategies using certain parameters like volume concentration, best price evaluation, product specification improvement, relationship restructuring, joint process improvement, and global sourcing. This is the point where an e-procurement system or other robust acquisition tool becomes a part of the overall product sourcing process.

Benefits of Strategic Sourcing Methodology

  • Encourages constructive competition
  • Supply risk management
  • Controls procurement costs
  • Maximizes ROI
  • Streamlines procurement operations
  • Helps build strong and trustworthy relationships with existing and new vendors
  • Gain a competitive advantage

 

Getting Down To Business

We are offering Free Trials to all our customers or prospects who have been impacted positively or negatively by Covid-19 and are looking to connect with prospect buyers immediately.

Contact us

COVID-19

Featured

Overview

Buyers

Diagnostic Test Kit

Additional Resources
Contact

A LOOK INTO THE FUTURE OF THE FOOD AND BEVERAGE INDUSTRY AFTER THE COVID-19 PANDEMIC

Identifying the Top 100 Coronavirus (COVID-19) Test Kit Manufacturers Across Regions

Sourcing and Procurement Market Intelligence Services

Products and Tools

Featured

Services Overview

Category Market Intelligence

Supply Market Analysis

Low-Cost/Best-Cost Country Sourcing

Benchmarking

Spend Analysis

Cost Modeling and Should-Cost Analysis

Total Cost of Ownership (TCO) Analysis

Supplier Risk Analysis

Supply Chain Risk Assessment

Supplier Sustainability Assessment

Commodity Price Forecasting

Category Management

Supplier Negotiations

Contract Management

Procurement Store

Purchase Ready-to-use Reports

SEinsightsTM

Our Robust Procurement Platform

BizVibeTM

Suppliers and Buyers Marketplace

SUPPLY MARKET ANALYSIS FOR A METAL MANUFACTURING COMPANY HELPS ACHIEVE ANNUAL SAVINGS OF $15 MILLION

Industries

Industries Overview

Automotive and Tire

Banking, Financial Services and Insurance

Biotechnology, Pharmaceutical and Life Sciences

Chemicals

Energy

Food and Beverage

Industrial and Manufacturing

ICT, Media and Entertainment

Mining, Metals and Minerals

Retail and CPG

Transportation

INCREASING LOCAL PROCUREMENT BY 28% FOR A COMPANY IN THE METALS AND MINING INDUSTRY – A CASE STUDY BY SPENDEDGE

Resources

Featured

Resources Overview

COVID-19 Resources

Blogs

Case Studies

Whitepapers

Webinars

Press Releases and Media Mentions

5 KEY CORONAVIRUS RISK ASSESSMENT STRATEGIES TO OVERCOME HEALTHCARE SUPPLY CHAIN CHALLENGES

IDENTIFYING STRATEGIC PURCHASING PRACTICES FOR A COMPANY IN THE US FOOD SERVICE INDUSTRY | SPENDEDGE’S LATEST SUCCESS STORY

Clients

Featured

Clients Overview

Who We Serve

Case Studies

SUPPLY CHAIN MANAGEMENT HELPS AN IMPORT AND EXPORT INDUSTRY CLIENT ENHANCE SUPPLY CHAIN VISIBILITY

REALIZING SAVINGS OF $15 MILLION IN PACKAGING SPEND FOR AN FMCG CLIENT – PACKAGING SOURCING STRATEGY

About Us

News

About SpendEdge
Why SpendEdge?
Vision, Mission and Values
Clients
Social Impact
Global Offices

Press Releases and Media Mentions

Upcoming Events & Webinars