What Is Strategic Sourcing?
Strategic sourcing is the overarching strategy a company chooses to employ with its procurement process and supply chain that is continuously managed to increase its overall value proposition. When you have an underlying strategy behind your sourcing efforts, you optimize information so that your organization can consolidate and leverage spend, choose and partner with the best vendors and make the best possible decisions in the marketplace. This practice requires a constant analysis of what an organization buys—from where and whom—at what total cost and at what volume. It places emphasis on examining the entire life cycle of a product, not just its initial purchase price.
Strategic sourcing incorporates customer needs, organizational goals, company culture and philosophy, department bandwidth and market conditions. What's your strategy for spend management and how do you award those contracts? How differently do you approach spends you actively manage compared to spends that go unmanaged? When an organization takes a strategic methodology to sourcing, they employ a collaborative and fact-based approach that facilitates the acquisition of optimal products and services for the best value. From our standpoint, the main stages of strategic sourcing are:
- Ensure your department goals and philosophies are aligned with those of your company.
- Expand your professional network and research the market.
- Analyze the data and identify your needs.
- Communicate with potential and existing suppliers.
- Negotiate and award contracts.
- Monitor performance and continuously improve.
This evaluation creates a state of optimization that helps sourcing professionals simultaneously gauge limitless procurement inputs. It examines the global market, current supply chain conditions, and individual supplier circumstances while offering alternatives to address the buyer's sourcing goals.
Why Strategic Sourcing Is Crucial to Your Business
Many popular strategies have grown obsolete in modern procurement. It's now essential to change—from being solely a "buyer" to becoming the "architect" of your supplier relationship management—in order to handle the dynamic and complex challenges of today. Procurement organizations are taking a more collaborative approach and no longer consider their suppliers merely a representation of a material's price. Strategic sourcing helps companies join forces with supplier partners who can help them grow their business—while weeding out those who have held them back, or are not philosophically aligned. As a result, these businesses operate more smoothly, deliver finished products faster and continue to advance within their respective industries for years to come.
Many companies are good at negotiating on price, but this myopic approach completely neglects the true total value vendor partners can bring your organization. Strategic sourcing includes the total cost of ownership (TCO) as well as the impact procurement decisions have throughout the life of the product. This takes into consideration how the purchasing choices you make affect your customers and the overall goals of your organization. By pursuing suppliers based on facts that come from analysis and market intelligence—rather than just convenience, proximity or prior awareness—you'll find the suppliers that are best equipped to meet your needs.
With frequent supplier engagement and the proper metrics, you can work as part of a team to ensure expectations are met—and even exceeded. The partnership that’s formed through strategic sourcing will grow over time and the value of having an active relationship will pay dividends. If you're not using the best supplier option or solution available on a critical procurement need, you can cause catastrophic damage to your brand. Successful strategic sourcing can actually allow your firm to reduce costs while still improving the quality of your products.
As the largest and most experienced organization in group purchasing, OMNIA Partners helps companies strategically source from top to bottom. Here are some of our core strategic sourcing competencies that have helped our members strengthen their purchasing prowess and elevate their businesses:
With the power of group leverage and access to our pre-negotiated savings programs with vendors, you can enjoy significant savings on a robust portfolio of category offerings.
Best Practice Sharing
OMNIA Partners’ network, professional community and award-winning events provide the relationships and industry expertise you need to compete in the ever-changing business world.
Reduce Supply Chain Risk
Each vendor is thoroughly audited before gaining admission to the group and must maintain significant performance standards to remain a supplier partner. Access to these vendors across a broad spectrum of categories adds quality, depth and solutions to your supply chain so that you're covered when the unanticipated occurs.
Improve Procurement and Production Bandwidth
Our GPO is the only one of its kind. Our offerings, world-class suppliers and solutions can help support and elevate your entire operation.
Access to New Suppliers and Innovations
We are constantly adding new resources and innovative suppliers, as well as working with our current base to generate the best relationships for our members.
Create True Business Partnerships
Can’t-miss events, conferences and summits—as well as daily access to decision-makers looking to develop mutually beneficial and long-term relationships—make our group second to none.
When it comes to sourcing, you may be getting the job done, but are there areas you can further enhance or develop? OMNIA Partners doesn't offer suppliers or solutions that just meet requirements and are only "good enough." We strive for true partnerships and resources that can help your business soar past every growth goal and marker of success.