Strategic sourcing can make or break your business and finding the right suppliers will require research, meeting with the vendors, and even a certain amount of trial and error. In order to foster the best strategic sources more quickly, there are some general steps that will outline the path to follow:
1. Identify Your Needs
Coordinate and consolidate in-house work orders, and familiarize yourself with the needs of the company on a regular basis. Track purchase orders and product deliveries, taking note of suppliers that regularly have delays or products shortages and fluctuations.
2. Network with Peers and Providers
Talk with your business equals, partners, and favorite suppliers about your current status, where you want your business to grow, and how they can play a part in making that happen. Ask for referrals on suppliers to fill niches or replace unsatisfactory suppliers. Building a team of suppliers who work well together can be a windfall for your company in a number of circumstances.
3. Invite Bidding
Invite suppliers you are not familiar with to place bids or come in for interviews and consultations. Explain why the niche you are filling exists and describe some of the problems or complaints you have had in this area in the past. Making sure that a prospective supplier understands your needs and expectations is crucial to achieving the success you are trying to build. Strategic sourcing demands that you are willing to undergo a limited amount of change in order to improve the overall performance of the company.
4. Award Trial Contracts
Setting up trial contracts means a little more paperwork, but limiting your obligations to, for example, 90 days, means that you can observe the way a supplier operates and weed out those which do not meet your preferences. By definition, strategic sourcing means that you can choose to renew the trial for a more observation and comparison or discharge that company in favor of another one that offers similar products or services.
5. Compare Track Records
Set up any parameters you wish for your suppliers, and maintain accurate records to track them, allowing you to take action when a problem first appears. From meeting with a rep to get the situation corrected to warning or actually discharging the supplier, these parameters will help. You should not make it a habit to regularly replace your suppliers, but that is always an option in situations where performance, product value, or other factors warrant doing so.
6. Refine Your List
Set up a regular schedule for reviewing the performance of your vendors. Just as employees may be periodically reviewed, strategic sourcing requires doing the same for all of your vendors and service contractors. Even when everything is moving along according to plan, these reviews will show you where improvements as well as deficiencies have occurred, and like your employees, your suppliers are always eager to be told they have performed well in their role with a business.
Strategic sourcing will help you join forces with suppliers and vendors who can help you grow your business while weeding out those that have held you back or reduced production. A bit of paperwork and organization will be necessary, but the end result is a business that operates more smoothly, delivers the finished product more quickly, and is able to keep moving for the foreseeable future.