subject: Sourcing - Strategic Approach Gains More Than Just Cost Cutting [print this page] Strategic sourcing is an institutional procurement process that continuously improves and re-evaluates the purchasing activities of a company. In a production environment, it is often considered one component of supply chain management. Strategic sourcing techniques are also applied to non traditional area such as services or capital.
Outsourcing often refers to the process of contracting to a third-party. While outsourcing may be viewed as a component to the growing division of labor encompassing all societies, the term did not enter the English-speaking lexicon until the 1980s. Since the 1980s, transnational corporations have increased subcontracting across national boundaries. In the United States, outsourcing is a popular political issue.
Given the strategic nature of the advisory and the prevalence of sourcing amongst global organizations, most management consulting firms today offer sourcing advisory services. In addition, there exist a host of specialized Sourcing Advisory Firms that focus on providing sourcing advisory and research inputs to the industry.
Finding a Sourcing Advisory Method that guides clients through every step of the journey can be a difficult challenge. Many consulting firms offer a great source of ideas but are not around to see them through to delivery.
Whenever the consultants get engaged, they need to drive value from day 1. For effective strategic sourcing strategies to be implemented, a holistic service is required across the spectrum of strategic, operational, sourcing and compliance issues that inevitably arise during significant change programmes.
It's important to leverage both the sourcing strategy and the operating model by tying them in to each other to increase the returns of both initiatives. Sourcing can therefore be about much more than just cutting costs, but about creating real business value.
When selecting an advisory for your sourcing programme it's important that they have expertise from several important disciplines including: buy side, sell side, legal and advisory.
Strategic sourcing can be an enabler and continuously improve and re-evaluate purchasing activities to ensure cost effective change processes are implemented to get maximum results from any strategic sourcing programme.
There are software tools available to supplement personal consulting activities and the most impactful include Visual Sourcing and Harmony.
Combining a holistic strategic vision with appropriate software tools and experienced personal advice is the way to get a well-rounded and effective sourcing solution.
So next time you are tasked with reducing costs by implementing a sourcing strategy, ensure you consider working with consultants who bring to bare significant industry experience as well as appropriate tools.
Benefits include:
Aggregate spend across departments to leverage volume purchasing power and reduce purchasing costs
Streamline sourcing, procurement and vendor management processes
Reduce manufacturing, inventory and operations costs
Access a previously untapped global supplier pool and internationally competitive pricing
Access a wider range of high-quality, low-cost products, materials, manufacturing and production techniques, transportation options and services
Accelerate manufacturing processes and time-to-market to gain a competitive edge. Increase product quality, output, sales margins and profitability
by: Gen Wright
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