Strategic Sourcing

Strategic Sourcing

1. is

   • Focused on a category of products or services, and for that reason, the strategy is sometimes called a category strategy
     • Step 1: Build the Team
       • is
         • Identify the people who should be involved, and define the purpose, boundaries, and goals of the process; identify the tasks involved; and provide a plan for communicating the results.
           • for example
             • If the team is tasked with purchasing computers, then users from information systems should be included
     • Step 2: Market Research
       • thorough
         • Supplier spend analysis to determine past expenditures for each commodity and supplier.
           • Porter Five Forces
             • created to
               • Describe competitive forces in a market economy.
                 • Higher leves of competition
                 • Threat of new entrants
                 • Threat of substitute products and services
                 • Power of buyers
                 • Power of suppliers
           • SWOT Analysis
             • examines
               • Strengths, Weaknesses, Opportunities, and Threats.
           • Supplier Analysis
             • Benchmarking
             • Request for Information
             • Value Chain Analysis
             • Supplier Research
     • Step 3: Strategy Development
       • must
         • Convert all data into meaningful knowledge and apply some meaningful tools to structure the information
           • two tools
             • Portfolio Analysis Matrix
               • is
                 • Tool to structure and segment the supply base
             • Supplier Evaluation Scorecard
               • may be used
                 • As a decision support tool
     • Step 4: Contract Negotiation
       • two methods
         • Competitive Bidding
           • entails
             • Request for bids from suppliers with whom the buyer is willing to do business
         • Negotiation
           • is a
             • More costly, interactive approach to final supplier selection.
     • Step 5: Supplier Relationship Management
       • typically
         • One member of the team will continue to work with the supplier in the role of supplier relationship manager.
           • must
             • Continuously monitor the performance of the sourcing strategy, as well as the supplier.