Sourcing is a continuous, iterative and comprehensive activity which can profoundly impact the direction and effectiveness of an organisation. The scale and scope of sourcing projects can vary enormously and the approach to a project should be specific and targeted. Supplier selection is a major component of any sourcing approach and technology can greatly facilitate many aspects of the sourcing process.
Sourcing is usually one of the most efficient ways to achieve savings. There is though, a significant difference between those that do it and those that do it well – top performers for example can achieve four times the savings compared to the average organisation.
Usually, for mid to large organisations, this is a difference of many millions. Savings are typically lost because of poor strategy, tendering, negotiations & compliance.
Our business considers best practice to divide the organisations into two categories:
Best practices for mature procurement functions
Best practices for fast growing procurement functions
Benefits of using strategic sourcing
Having a strategic approach to sourcing can help your organisation in many ways. As we all well know, one of the most important objectives of a CPO is the delivery of savings, strategic sourcing plays a crucial part in achieving this target.
Strategic sourcing in not a one time strategy either, but a constant process which needs to take place in a world-class state of the art procurement function.
In addition, carrying out a sourcing strategy can really help your business improve the company’s profits and the overall procurement effectiveness.