Strategic Sourcing is a critical function in any business, especially in today’s globalized marketplace. Keeping products or parts in stock at the right, quality and price have always been core deliverables for Sourcing and Procurement teams. The growing corporate and brand commitments to Sustainable business are increasing the information and requirements of supply partners for many brands.
Effective Sourcing Strategies can significantly and rapidly improve a company’s bottom line, ensuring cost-effective sourcing while maintaining high-quality standards. Understanding the stages in sourcing is essential for optimizing the supply chain and achieving business goals.
The challenges and turmoil in today’s global sourcing and trade environment make the need for a clear sourcing strategy imperative.
ET2C International: Your Global Sourcing Partner
ET2C International have over 23 years’ experience as Global Sourcing Experts. Our 200 colleagues are based in 7 offices across developed and emerging Asian sourcing markets to be your feet on the round. We act as a bridge to strategic sourcing partners in Asia, ensuring complete supply chain transparency and meeting all quality and compliance standards. We simplify sourcing by providing you with a team “on the ground” across seven countries, ensuring your sourcing plans are delivered effectively.
Contact us at contact@et2cint.com to learn how our experience can help you build a winning and sustainable sourcing strategy and gain a competitive edge.
The Key stages in building your Strategic Sourcing plan
- Identifying the Need
The first stage in sourcing involves a thorough assessment of the company’s needs. This involves specifying the product or service required, its desired functionality, and the quantity needed. Conducting a needs assessment helps in creating a clear and concise requirement that guides the entire sourcing process.
- Market Research
Market research is crucial to identify potential suppliers and understand market trends. This involves analyzing the supply market, evaluating the capabilities of different suppliers, and gathering information on pricing, quality, and delivery performance. Comprehensive market research helps in making informed decisions and finding the best sources for the required products or services.
- Supplier Identification
Based on the market research, the next step is to identify potential suppliers. This involves shortlisting suppliers that meet the company’s criteria and have the capability to deliver the required products or services. It’s essential to consider factors such as the supplier’s financial stability, reputation, and track record in the industry.
- Supplier Evaluation and Selection
Once potential suppliers are identified, a thorough evaluation process follows. This includes assessing the suppliers’ capabilities, quality management systems, compliance with industry standards, and overall reliability. Site visits, audits, and reference checks are often part of this evaluation process. After a detailed assessment, the best-suited supplier is selected.
- Negotiation and Contracting
Negotiation is a critical stage in the sourcing process. It involves discussing terms and conditions, pricing, delivery schedules, payment terms, and other contractual details with the selected supplier. The goal is to reach a mutually beneficial agreement that ensures value for both parties. After careful evaluation and negotiation, the contract is awarded to the supplier who best meets the requirements. Contract management ensures both parties fulfill their obligations. This includes monitoring delivery schedules, quality control, and performance metrics.
“Communication is crucial to supply chain success and yet it is surprisingly one of the biggest areas in need of improvement.” says Oxford College of Procurement and Supply
- Implementation and Management
After the contract is signed, the implementation phase begins. This includes placing orders, managing logistics, and coordinating with the supplier to ensure timely delivery of goods or services. Effective communication and relationship management with the supplier are crucial during this stage to address any issues that may arise.
- Performance Review and Continuous Improvement
The final stage involves reviewing the supplier’s performance and the overall sourcing process. Key performance indicators (KPIs) such as delivery time, quality of goods, and cost savings are evaluated. Regular performance reviews help in identifying areas for improvement and ensuring that the sourcing strategy remains aligned with the company’s goals. Continuous improvement efforts, including feedback loops and supplier development programs, enhance the efficiency and effectiveness of the sourcing process.
Conclusion Delivering the benefits of Strategic Sourcing
Understanding the stages in sourcing is essential for any business looking to optimize its procurement strategy. By following these stages companies can ensure a streamlined and efficient sourcing process that supports their business objectives.
Implementing a structured sourcing strategy not only helps in achieving cost savings but also ensures high-quality procurement, fostering long-term partnerships with reliable suppliers. By continuously improving the sourcing process, businesses can stay competitive and responsive to market changes.
To find out more about how our Sourcing Strategy can help you to gain a competitive edge contact us at contact@et2cint.com.
