In such situations, services like Strategic Sourcing, assumes greater importance in giving organizations competitive advantage. Strategic Sourcing focuses on the following:
Developing in-depth understanding for knowledge based buying.
Developing systems and procedures for building World - Class purchasing organization
Building sustained value creating relationships with suppliers.
Strategic sourcing is an approach which can overcome shortcomings associated with traditional cost reduction programs and make the process sustainable and repeatable. It realizes the potential of key people and suppliers who can add value to the procurement process thereby managing costs.
In today's competitive business environment, especially in developing markets like India, supply chain management professionals are constantly seeking out creative ways to reduce costs, improve the quality of the final product and achieve a faster turnaround time to complete the marketing cycle. Strategic sourcing is one proven method that procurement managers in Indian companies can use to help achieve their supply chain goals. Strategic Sourcing program has following steps:
1. Cherry-picking of suppliers
From the vast pool of available suppliers, the most reliable ones are to be identified while making a selection for alternative suppliers. This allows for a consistent quality of products throughout the year. Good procurement managers are apt at locating the best quality materials at the lowest possible costs. Yet another consideration when identifying suppliers is choosing a specific supplier that has a positive brand image with your consumers which in turn can create an excellent product differentiation opportunity, potentially leading the consumer to prefer your product over others.
2. Relationship building is important
There is more to it than just identifying the best suppliers. Developing and nurturing a positive and a long-term relationship by working closely with the suppliers can create many win-win situations. Weaving up close knit relationships with suppliers actually help sourcing professionals in better negotiating at cost, resolution of any issues, etc in the long run.
Creating and cultivating relationships with consumer-friendly suppliers creates opportunities for your company to improve product and company image via PR and marketing communication with consumers.
3. Skills enhancement
Knowledge and skills are things that need continuous up gradation in order to be effective at the right time. All professionals associated with procurement and can update their knowledge by taking online courses or attending specific industry seminars. Becoming proficient in this field and keeping abreast of the most current practices in the filed will help you understand, plan and implement a sound strategy. However, the need of having a fool proof strategy in place at the company level cannot be discounted.
4. Understanding the broader picture
It as a task requires the concerned person to have a wider view of various issues, opportunities, strategies, techniques and developments being pursued by the organization so that the person is in a better position to understand the challenges that may affect the sourcing strategy.