Strategic sourcing methodology pdf semantic scholar. From a buyers perspective, given that markets are in a process of maturation and that sourcing methodology including systematic market screening is available to buyers who can choose to insource or outsource we recommend see also the recommendation map in fig. The sourcing strategy development phase is an iterative process that involves deep dive analyses of the citys current it environment, including utilized resources and associated costs. How to strategic sourcing chapter 10 procurement and. Strategic sourcing is in fashion these days, but it also delivers real value to recruiting teams, so it is here to stay. Strategic sourcing follows a rigorous 7step process activities in each step are tailored to the nature of the commodity and the supply market. Strategies are selected based on realtime circumstances of each acquisition and influenced by factors such as the value of spend, risk in the category and the supply market character. The goal is to apply certain knowledge without adding to the known knowledge. A methodology for strategic sourcing article in european journal of operational research 1541. This chapter outlines strategic sourcing concepts, principles and methodology for executing the sourcing strategy. Introduction strategic sourcing does not go without saying instead, it was a long process during the last 30 years in the professional field of purchasing to reach strategic importance. Strategic sourcing outsourcing services, procurement. Traditionally, sourcing was considered to be the identification of new or potential suppliers. How to find the perfect strategic sourcing methodology for.
Sourcing strategy is therefore an integral part of a firms business strategy. Some of the sourcing strategies that are used in supply chain management today include. Bestinclass sourcing organizations are involved in project planning across the company. The supply chain sourcing course deals with different techniques that help you create lasting and productive supplier relationships. In order to do so, it explores the elements to be considered while developing the strategic sourcing.
Whether purchasing goods or services, a few items or a few thousand items, procureports eauction tool can generate signi. Strategic sourcing and procurement in engineering and construction a path to high performance and sustained cost e ciency. Highperforming procurement organizations recognize the opportunity presented by and the subsequent value to be gained from lowcost country sourcing lccs. With the recent emphasis on justintime jit manufacturing philosophy, strategic sourcing that establishes a longterm relationship with suppliers has become even more important and vital for enhancing organizational performance. Having a process provides a framework that, when correctly applied, can produce sustainable savings in a consistent manner. It is much more than simply centralizing procurement. Its a break from only sourcing active candidates for specific open roles, to sourcing continuously for future needs, and targeting both active and passive candidates. Leading organizations view the sourcing function as a key strategic contributor to success. Strategy sourcing is an approach to procurement whereby the business needs of the organization are matched with the supplier market. Designed for those who are familiar with strategic sourcing but looking to get at the top of their game, expert strategic sourcing programs is conducted by a word class instructor.
Strategic sourcing is a logical process involving the application of tools by skilled, competent and knowledgeable people. Strategic sourcing is organized since some type of methodology or process is needed. On average, gep helps enterprise procurement teams realize 25 to 30 percent incremental savings by. Strategic sourcing also known as sourcing strategy or procurement strategy allows an organization to realize significant savings by evaluating its procurement costs across a number of spend categories. Heres the tenth and final installment, you can download the full pdf at the end chapter 10. It specifically deals with managing the supply base in an effective manner by identifying and selecting suppliers for strategic longterm partnerships, involving in supplier development initiatives by effectively allocating resources to enhance supplier performance, providing benchmarks and. Industry summer 2016 spotlight in focus strategic sourcing.
Understanding the sourcing organization maturity model. Managers can apply many different sourcing processes but these procedures should be. The results of a wellmanaged strategic sourcing initiative can be impressive and the benefits can be extended well beyond cost reduction. In order to undertake strategic sourcing, purchasing and supply. However, strategic sourcing can go well beyond cutting costs. Gep smart sourcing can be used as a standalone application or as part of the gep smart unified procurement platform, alongside spend analysis, contract management, category management, supplier management, procuretopay, and other functions. In the mid1990s, a new electronic sourcing tool emerged that has had, and is continuing to have, a profound impact on the way in which firms source. Sourcing strategy deals with planning, designing and building a reliable and competitive supplier base, determining the strategy for procurement, defining pricing strategies and supply chain requirements. This team sets the overall direction for procurement, aligned with the business strategy. Establishing a good strategic sourcing methodology a great strategic sourcing methodology is where companies start looking for quantum savings from their supply chain. This is of course still a fundamental aspect of strategic sourcing but this practice. You have the fundamentals down, now its time to take the next step. The final selection is usually done by the team and signed off. A case study lindani mbatha department of engineering and technology management, graduate school of technology management, university of pretoria, south africa lindani.
In this way, strategic sourcing has become a critical part of strategic management that is focused on a companys sourcing decision making. Peep tomingas delta bid have produced a 10 chapter strategic sourcing guide. It also includes a framework to assess an enterprises sourcing strategies and sourcing strategy capabilities. Strategic sourcing, it begins the critical process and lays the foundation for creating value through the purchasing process. Sourcing strategies and their implementation in the aerospace. It requires input from all departments and functional areas for an organization. Contract management is the last stage of strategic sourcing process cycle, where the impetus is laid on ensuring that the deliverables of the contract are executed smoothly. Advanced strategic sourcing white paper source one. The strategic sourcing process requires an organizedapproach or method that allows a supply chain function to systematically work on spend areas or processes. Strategic sourcing pdf the scope of strategic sourcing extends beyond supplier price negotiation and takes into account the total cost of ownership.
Both the practitioner and the academic literature provide a multitude of examples and evidence for the strategic importance of the sourcing function. Strategic sourcing is a process that creates efficiencies across all spend categories, minimizes supply risks with improved supplier selection, and gives visibility into pricing and forecasting. Building a foundation for success understanding the difference between sourcing and strategic sourcing. Strategic sourcing, sourcing capability and firm performance in the us textile and apparel industry article pdf available in strategic outsourcing an international journal 52 june 2012 with. Purpose the purpose of this document is to provide a workable procedure for the strategic sourcing methodology of procuring goods and services for th e state of louisiana. It is a crucial phase to for the strategic sourcing process cycle as market and industry dynamics effect the contract terms. Finally, in the capstone course on supply chain management strategy youll solve a reallife business case. A comprehensive outsourcing deal means that you are engaging with a training partner for a multiyear period to strategically manage a comprehensive set of processes across all four functional process areas of your. Nowadays sourcing is a critical activity in order to get a competitive advantage. Opportunities identified in gep smarts spend analysis function can be transformed into strategic savings projects in gep smarts savings function.
Coupa whitepaper understanding the sourcing organization maturity model 3 rest of the company, until the point where they start to be proactively pulled into projects by other departments at the beginning of the project. Oct 16, 2017 heres how to find the perfect strategic sourcing methodology for your business. Developing and implementing a strategic sourcing strategy. Organizations should set up a strategic procurement team. The first stage in implementing strategic sourcing is the positioning of the purchasing and supply management function within the organisation.
A creative approach to strategic sourcing and supplier engagement purchasing managers and strategic sourcing professionals often follow a consistent methodology when planning and conducting a sourcing initiative. Strategic sourcing methodology sig sourcing industry group. Strategic sourcing methodology this diagram shows the process methodology of strategic sourcing from assessing the opportunity through implementation. The scope of strategic sourcing extends beyond supplier price negotiation and takes into account the total cost of. Though interlinked closely, both procurement process and sourcing strategy are not one and same. The strategic sourcing methodology is a sequence of steps, which encompass the structured and comprehensive approach to purchasing all goods and services on a university wide basis. This seminar is an excellent follow up to the fundamentals of purchasing because it offers the knowledge you need to succeed as you grow in your supply management career.
A read is counted each time someone views a publication summary such as the title, abstract, and list of authors, clicks on a figure, or views or downloads the fulltext. Cips has formulated positions on strategic sourcing as this is a key activity for purchasing. Sourcing all other spend that do not fall under category management but continues to use request for information rfi, request for proposal rfp request for tender rft and request for quotation rfq market strategies. Procurement is always on the lookout for ways to be more competitive in sourcing. Strategic procurement is an organizationwide process. Sourcing strategies and their implementation in the. A good strategic sourcing strategy is to conduct multiple rounds of negotiations to get to a short list. Sourcing is not simply a way to find the best price for a certain product but it has become a decisionmaking process that can shape the business of an entire organization. Jul 19, 2016 strategic sourcing takes on a new approach of collaboration of constituents across supply chain to better serve downstream customers that would result in enhancing longerterm profit enhancement. Abstract this study presents a methodology for capitalizing on the advantages of centralized purchasing in. What it is what it is not focused on the total cost of ownership tco incorporating. Comprehensive bpo this is the most complex, strategic, long term, and demanding relationship you can have with a supplier. Delivering customer value through procurement and strategic.
Strategic sourcing methodology university of strathclyde. The challenge in this case is getting a company that has. Section 5 then discusses the various sourcing practices investigated in this project. Strategic sourcing is a sourcing method that involves applying different strategies while sourcing products or services.
This document details a 4phase framework to strategic sourcing, outlining time frames, activities, and outputs. Its not just about cost savingswhich was the traditional mindset of the procurement function, says. Apr, 2011 contract management is the last stage of strategic sourcing process cycle, where the impetus is laid on ensuring that the deliverables of the contract are executed smoothly. Sourcing is a collaborative effort between a business and their partners there must be coordination in generating supply orders, ordertaking at the partners end, and order fulfillment. The full content of this page is only available to sig members.
What is strategic sourcing and why is it important. So we spend a lot of time on sourcing to make sure every meal provides you with clean, mineralrich, bioavailable ingredients. Creating an allstar strategic sourcing team successfully implementing an effective strategic sourcing process requires collaboration from both internalread. Pdf the role of strategic sourcing on global supply chain. It is a crucial phase to for the strategic sourcing process cycle as market. Pdf strategic sourcing, sourcing capability and firm. Strategic sourcing is a critical challenge faced by many firms involved in the latest innovations of supply chain management. Cips has formulated positions on strategic sourcing as this is a key activity for purchasing and supply management professionals. This is the latest evolutionary stage of purchasing and is characterized by real time data exchanged between suppliers and purchasing, contracting for longterm relationships.
Impact the bottomline cost reduction is typically the primary goal of most strategic sourcing initiatives, because savings in cost of goods sold cogs. Strategic sourcing is an approach to supply chain management that formalizes the way information is gathered and used so that an organization can leverage its consolidated purchasing power to find the best possible values in the marketplace. The methodology covers the way in which a commodity is procured, managed and its benefits tracked through the commodity lifecycle. Strategic sourcing is a procurement process that connects data collection, spend. The strategic analysis report, marketplace realities in strategic sourcing, details gartners view of strategic sourcing, while this strategic analysis report provides practical suggestions on how to develop a sourcing strategy. Strategic sourcing strategy cips has formulated positions on strategic sourcing as this is a key activity for purchasing and supply management professionals. It can have a profound impact on a companys financials and can strongly influence the purchasing and procurement processes. Revisiting the core principles of strategic sourcing georgia. Strategic sourcing, being a part of procurement, is nowadays not just focused on costs savings but also on supporting the company in realizing its longterm goals. Strategic sourcing process pdf optimizing the process to gain a competitive advantage.
Sourcing alone to a more holistic category mgt approach afica leading af transition from the field af has limited functional representation at federal cat mgt meetings af equities at riskgsa pushing to mandate their contracts afica has been doing strategic sourcing for 5 years hired industry experts. Online auctions are an integral part of the strategic sourcing process. Strategic sourcing takes on a new approach of collaboration of constituents across supply chain to better serve downstream customers that would result in enhancing longerterm profit enhancement. Strategic sourcing refers to making supply chain management decisions with the intent to create distinctive value and to achieve a competitive advantage. The first round of the negotiation process, after reducing the bids to the valid ones, is conducted with many suppliers asking for clarifications and more detail where needed. The strategic sourcing methodology provides the state with a process to reduce spend on key categories, reduce. The approach is founded on a detailed understanding of both the spend profile of. A method whereby a purchased part is supplied by only one supplier. For purposes of this paper, strategic sourcing will be defined as the. The approach adopted includes the following phases.
The ultimate goal of the sourcing strategygy p phase is to recommend a specific sourcingg. A framework for competitive advantage march 2001 aberdeen group, inc. Strategic sourcing and procurement in engineering and. Crowd sourcing, outsourcing, global sourcing, and low cost country. Strategic sourcing is critical for firms practicing the principles of supply chain management. General motors initiated systematic strategic sourcing in the. The strategic sourcing process purchasing procurement center. The first step to identifying the perfect strategic sourcing methodology for your business is collecting data such as your ap, invoices, general ledger data, and other information that may assist you with purchasing decisions. The 7 steps of a strategic procurement process trade ready.
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