Strategic sourcing:  A disciplined approach to supply market analysis that continuously improves and re-evaluates the purchasing activities of an organization. Strategic sourcing provides the best possible values in the marketplace to produce sustainable savings and reduce cycle times. Sourcing optimization starts from a diverse strategic perspective and usually takes the form of strategic decisions. It is important to identify untapped opportunities to improve vendor access and increase the value of each dollar spent. Drive benefits from emerging practices and key technologies to optimize strategic sourcing initiatives and supplier engagement.

Related: How to Gain Actual Compliance

Key elements of a strategic sourcing approach and stages of implementation are as follows: 

1. Strategic in-house benchmarking
   Performed to identify and evaluate sourcing initiatives. This also supports gap analysis and performance improvement opportunities. Before choosing a projected course of action, it’s necessary to understand what’s being sourced and where, the pricing model, and service level agreement standards, including future requirements. Benchmarking gets you there.
2. Spend analysis and opportunity assessment
   Spend analysis includes both the classification and enrichment of spend data. The purpose is to understand total spend and thereby reduce procurement costs, rationalize the supplier base, and improve overall procurement performance.
3. Market impact assessment
   Analyze supplier and marketplace dynamics, including everything from economic stability to supplier performance to labor issues. Opportunities and risks may hinder the domestic and global sourcing efforts in the future. These and many other factors are essential to a good sourcing strategy.
4. Building a sourcing strategy
   Sourcing strategies should be developed on the basis of potential suppliers’ concerns and market conditions. Keep your strategy up-to-date with new ideas if market conditions fluctuate, or if the goals of your organization change.
5. Create RFX documentation
   After building the sourcing strategy, it is time to create the user-friendly RFX (RFI, RFP, RFQ, etc.) document that at a minimum would include product or service specifications, benchmarks, a value-based pricing strategy, and standard terms and conditions for financial services.
6. Selection and negotiation
   During this stage, sourcing professionals select and negotiate with suppliers as a result of an initial bid process. Compare outcomes in terms of total value, or implementation cost differences from both qualitative and quantitative aspects.
7. Implementation
   This is the final milestone of the sustainable sourcing initiative. Implementation should stay true to the action plan with suppliers. In order to make certain transitions and optimize the project results, consider change management requirements.

Applying a strategic sourcing process can have a remarkable effect on your business. If you’re interested in learning more, why not browse www.xeeva.com?