Strategic sourcing is a term heard a lot in business today. But what exactly is strategic sourcing and how does it benefit your business?
Strategic sourcing involves an in-depth analysis of all areas of the supply chain with the intent to increase productivity and efficiency, resulting in higher quality products and more competitive costs. Essentially, it’s a long-term proactive approach to procurement versus a short-term reactive approach, aligning an organization’s procurement strategy with its overall goals and objectives. This ongoing process allows companies to identify the best sources for products from around the world.
Strategic sourcing is focused on the activities that lead up to the actual purchase of goods. This includes analyzing the needs of the business as well as the climate of the marketplace at large. The emphasis is not just on finding the lowest-priced option, but on the big picture of creating the best total cost solution which includes product quality, repetitive product reduction and continuous improvement. This allows the company to maintain a lower cost of operation. A dedicated, skilled team along with the right technology platforms are required for successful strategic sourcing.
So, what are the top benefits of employing a strategic sourcing team? The most obvious benefit to the customer is competitively priced products that exceed quality expectations. Identifying and selecting suppliers that provide the highest value at the right cost enables an organization to continuously achieve higher cost savings that can be passed along to the customer. In short, strategic sourcing delivers cost savings without compromising on quality.
Other benefits are the optimization of ideal suppliers and the building of long-term supplier relationships. Taking time to analyze suppliers’ profiles, capabilities and core values allows you to align your business objectives with the ideal suppliers. This alignment results in higher efficiency and minimizes supply chain risks. It also leads to long-term relationships with those key suppliers.
A strategic approach to sourcing can be extremely beneficial to a company purchasing a high volume of products as well as to their customers. ORR Safety has a team dedicated to strategically procuring quality products at the best price. To learn more about leveraging ORR’s strategic buying power by partnering with us, click here.