If you’re looking for ways to streamline your procurement process, strategic sourcing might be for you. Through strategic sourcing, you can improve supplier selection to minimize supply risks, drive efficiency across your spend categories, and gain valuable insight into your pricing and forecasting.
Want to know more about strategic sourcing? Here’s how it works:
A High-Level Look at Strategic Sourcing
Strategic sourcing is a customizable procurement process that leverages a single integrated system to increase your profitability. A strategic sourcing system will link together data collection, spend analysis, market research, negotiation, and contracting. Strategic sourcing users participate in a digital business network, which requires digitized documents and automated workflows.
There are five main elements to a successful strategic sourcing program.
Spend Analysis
Strategic sourcing software aggregates your purchasing data into one central database. Because the data is concentrated into one source, you can easily run spend analysis reports to see exactly where your money is going.
Competitive RFx
When using strategic sourcing, you have an advantage over other organizations because you belong to a digital business network that facilitates requests for RFPs and gives suppliers a chance to compete for your business.
Negotiations
Strategic sourcing software can compare your data against market research to streamline negotiation through standardized processes and automated workflows.
Contracting
Strategic software makes contracting easier by simplifying the digital signature process and creating a cloud-based repository for contract documents.
Supplier Relationship Management
The automation and digitization of strategic sourcing allows your organization to better manage communication and follow-up to enhance your supplier relationships
The 4 Benefits of Strategic Sourcing
Now that you know what strategic sourcing can do, let’s talk about how it can benefit your business.
Continual Optimization
Strategic sourcing platforms have built-in feedback loops so you can assess their functionality. The platforms regularly evaluate suppliers and optimize performance so you can feel confident in knowing your software is running to its maximum potential.
Long-Term Supplier Relationships
With increased efficiencies and enhanced supplier communication, strategic sourcing builds trust with your suppliers. They’ll recognize that they are getting the best deals possible, which will lead to strong, long-lasting relationships.
Sourcing Alignment With Objectives
When you use strategic sourcing, your programs can be customized to match you with suppliers who share similar values and objectives. You can refine your parameters to exclude companies that work with clients in certain industries or with certain materials to make sure all the vendors in your supply chain can help you meet your business goals.
Significant Cost Savings
Strategic sourcing drives major savings across many areas of your business. Spend analysis and better negotiation capabilities will control your material costs, but the automated workflows and efficiencies can create significant savings in overhead. You may be able to run a smaller procurement team, or you can redirect team members to higher-priority strategic projects.
Conclusion
Now that you know how strategic sourcing works and how it can transform your business by driving efficiency and reducing costs, why not give Procoto a try? If you’re ready to streamline your sourcing process, get in touch with us today!
