Are you looking for a way to cut costs while improving quality? Strategic sourcing could be the answer, because it allows you to find the best suppliers, and get the highest quality for the lowest price. Rather than merely focusing on the purchase price, strategic sourcing processes focus on the total cost of ownership and help you build stronger relationships with your suppliers to mitigate the risk of supply chain disruptions and threats to business continuity.
Strategic sourcing can do a lot to make your business stronger. You’ll benefit from a more resilient supply chain that can better weather shortages of supplies and raw materials. You’ll be in a position to collaborate more effectively with vendors over the long term. You’ll save money, and gain greater insight into your supply chain and procurement processes, while increasing efficiency, too. Let’s take a closer look at how strategic sourcing can benefit your business.
1) Add Resiliency to Your Supply Chain
Supply chain resiliency refers to the ability of a supply chain to bounce back when there’s a disruption. Building a more resilient supply chain requires a deeper understanding of the factors that lead to supply chain disruptions, so you can make changes to your procurement processes that might mitigate some of those factors.
Some strategies for mitigating supply chain risk include cultivating a deeper understanding of your suppliers’ own supply networks – when you know who’s supplying your suppliers, you can better gauge the likelihood of a given supplier failing to meet their obligations toward your business. You can further mitigate risk by sourcing business-critical supplies and materials from multiple sources, and by relying more on local suppliers who won’t be subject to the vagaries of geopolitical events halfway around the globe. The key is to assess your company’s supply chain risk, and take steps to mitigate it through strategic sourcing.
2) Strengthen Vendor Relationships
The right supplier can make all the difference to your business. Once you find the right supplier, it behooves you to cultivate a strong, long-term relationship with that vendor. You need to understand your company’s sourcing needs and goals intimately so that when you’re choosing suppliers, you can focus on how each one’s core competencies can benefit your business. Strategic sourcing allows for continuous improvement through performance monitoring and feedback, so that suppliers can mitigate issues, focus on what they’re doing right, and better support mutual success.
3) Cut Costs
Cutting supply chain costs isn’t just about finding the cheapest raw materials and supplies. Sometimes, things are cheap for a reason, and often those reasons will cost you more in the long run, whether it’s because of supply chain disruptions or product failures. Choosing high-quality supplies and materials, even if they cost a little more, will save you money in the long run and could bring in more revenue.
Focusing on the total cost of ownership will also save you more money than merely prioritizing purchasing costs, and strategic sourcing will help you make it happen. Strategic sourcing tools and strategies focus on the entire procurement process, not just the purchasing part. You’ll be better positioned to find suppliers that offer the best value, and you’ll be in a better place to negotiate prices and consider external market factors that affect procurement.
4) Increase Transparency
A digital tool for strategic sourcing can give you a degree of transparency into procurement processes that you’ve never enjoyed before. Strategic sourcing requires a continuous re-evaluation of procurement processes, where areas that need improvement are constantly being identified and changes are constantly being made.
To achieve this, you need real-time data into your procurement processes, and a digital strategic sourcing platform can give it to you. You can consolidate all the data previously spread out among disparate emails, spreadsheets, phone calls, and faxes. You can standardize your procurement processes so that they’re always done the same way. And you can make informed choices about how to mitigate supply chain risk, stay competitive, and make the most of market opportunities.
5) Work More Efficiently
Manual procurement processes can certainly benefit from a little systemization. With strategic sourcing, you can take that kind of systematic approach to the entire procurement process. Gone are the days when buyers had to keep track of different procurement processes across spreadsheets, faxes, emails, phone calls, and other forms of communication without any process governance and with little, if any, insight into suppliers’ operations. Now you can automate much of the work of a procurement, and stop relying on your memory alone for things like cost comparisons, services, quality, and capacity.
Strategic sourcing is the best way to handle procurement for your business. It’s a systematic approach that allows you to automate and standardize procurement, to build stronger relationships with your vendors, cut costs, and experience fewer supply chain disruptions. With strategic sourcing, you can focus on doing what your business does best – and outshining the competition.
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