Strategic Sourcing – Refinement

Victor Chen

Vice President, Customer Success

Strategic sourcing is a collaborative process with a focus on determining the most cost-effective materials and services, while improving quality and increasing overall value to the organization.

The key benefits of strategic sourcing result from performance enrichment through commodity management and competence development. Commodity management includes identifying and prioritizing commodity-specific opportunities across price, cost, demand and value- resulting in realized and recurring savings. This also enables organizations to achieve lower total cost of ownership and increased supply availability and assurance. Competence development ensures the organization fully captures the value of performance enrichment.

Developing and adopting enhanced strategic sourcing processes will identify areas to cost reduction and organization improvements. To some extent, organizations have engaged in re-engineering strategic sourcing processes, but the return on investment has been minimal.

Commodity management should be viewed as a holistic process, both demand and supply planning teams. In this process, organizations will realize value by focusing on specific profiled commodities. When profiling a commodity, the following should be taken into consideration: spend analysis, supply market evaluation, key cost driver, and value chain mapping impact.

Your organization will be able to identify and assess opportunities for improvement that align with your strategy, objectives, financial goals and implementation ability. The first step will be to coordinate and prioritize the opportunities, then develop a commodity strategy that addresses opportunities for realizing value.

In order to successfully accomplish the above, it is essential to have executive buy-in, focus and oversight. As always, we are here to help if you have questions or need guidance.