However, the use of different sourcing strategies depending on the characteristics of the components. Strategic procurement incorporates actions aimed at reducing the supplier base, negotiations, communication and maintaining longterm relationships with suppliers ryals and rogers, 2006. Cips has formulated positions on strategic sourcing as this is a key activity for purchasing. Strategic sourcing is one aspect of supply chain management scm, which encompasses the whole flow of bringing in materials from suppliers and managing the use of. Typically, when professionals define strategic sourcing they limit the scope and therefore the impact of a strategic sourcing initiative. The supply chain management specialization is made up of four basic courses in logistics, operations, planning, and sourcing, followed by a capstone course in supply chain management strategy. Although there are some aspects of tactical sourcing that can be reactive in nature, it does take a proactive approach to ensuring that purchases are made at optimal prices, as well as that supply is available. Either click the add button after adding a new value, or select a business unit by number from.
Strategic sourcing and procurement are two approaches to purchasing the components, raw materials, supplies and services a company needs to run its business. Nov 06, 2016 strategic sourcing refers to making supply chain management decisions with the intent to create distinctive value and to achieve a competitive advantage. Developing close relationships with suppliers necessitates commitment of relational assets, both human and physical. Strategic sourcing, which is considered a key aspect of supply chain management, involves elements such as examination of purchasing budgets, the. Either click the add button after adding a new value, or select a business unit by number from the list of existing values. What it is what it is not focused on the total cost of ownership tco incorporating. Ofpp strategic sourcing strategic sourcing ofpp a structured and collaborative process of analyzing an organizations spend and using the information to make business decisions about acquiring commodities and services more efficiently and effectively 4. Select this check box to create a pdf version of the sourcing event. The approach to sourcing focuses on both the current and future needs of a company. Becoming proficient in this field and keeping your knowledge uptodate, will help you understand, plan and implement a sound strategic sourcing strategy, tighten the effectiveness and efficiency of your supply chain infrastructure and reduce overall costs almost immediately. Strategic sourcing is a field in constant development.
Strategic sourcing is crucial for firms to obtain or sustain competitiveness in. This involves data gathering around the operating environment, supply markets, and key risks. Pdf the role of strategic sourcing on global supply. Pdf the role of strategic sourcing on global supply chain. Strategic sourcing and supplier management and integration decisions must be aligned with corporate mission and vision, have direct operating company involvement and must be based on a welldefined business case. Crowd sourcing, outsourcing, global sourcing, and low cost country. One of the main focuses of strategic sourcing is having both the lowest tco and lowest supply line risk.
Information on potential suppliers of the commodities the manufacturer must procure is analyzed, perhaps even on an ongoing basis. However, strategic sourcing can go well beyond cutting costs. Strategic sourcing, it begins the critical process and lays the foundation for creating value through the purchasing process. Strategic sourcing solutions and software sap ariba. However, the most popular definition of sourcing is strategic. Traditionally, sourcing was considered to be the identification of new or potential suppliers. Sourcing strategy providers evaluation and selection. A model of best practices for a sourcing process semantic scholar. Apr 22, 2015 whereas strategic sourcing takes a longerterm outlook, tactical sourcing focuses on activity thats transactional and shortterm. It can have a profound impact on a companys financials and can strongly influence the purchasing and procurement processes. Strategic sourcing is an institutional procurement process that continuously improves and reevaluates the purchasing activities of a company.
With the intense competition in the global textile and apparel. Ofpp strategic sourcing strategic sourcing ofpp a structured and collaborative process of analyzing an organizations spend and using the information to make business decisions about acquiring commodities and services more efficiently and effectively. The importance of strategic alignment between the purchasing and the firm strategy has increased in recent years because it has been pointed out as a mean to improve business performance. Whats the difference between strategic and tactical sourcing. Its a break from only sourcing active candidates for specific open roles, to sourcing continuously for future needs, and targeting both active and passive candidates. By reinforcing the focus on the core capabilities of the suppliers and assuring the right suppliers for the right sourcing objective, strategic sourcing helps create a synergy between organizations and its suppliers. Sourcing strategy scm supply chain resource cooperative. Strategic sourcing emerges as an important factor to support and integrate the suppliers into the supply chain intelligently this chapter aims to provide understanding of how strategic sourcing. Jan 19, 2011 a successful sourcing strategy requires a thorough understanding of a companys business strategy, the resources required to deliver that strategy, the market forces and the unique risks within the company associated with implementing specific approaches.
Strategic sourcing is an approach to supply chain management that formalizes the way information is gathered and used so that an organization can leverage its consolidated purchasing power to find the best possible values in the marketplace. Strategic sourcing institute for supply management. Price has no meaning the focus should be on quality and life cycle costs rather than. Developing and implementing a strategic sourcing strategy cips has formulated positions on strategic sourcing as this is a key activity for purchasing and supply management professionals. Category management enables the government to eliminate redundancies, increase efficiency, and deliver more value and savings from the governments acquisition programs. For purposes of this paper, strategic sourcing will be defined as the. We define a killer technology as one that delivers. Sourcing is the process of evaluating suppliers, negotiating supply contracts and managing the performance of suppliers. Select this check box to enable bidders to download events to an xml file. What is strategic sourcing and why is it important. A strategicsourcing plan rests upon gathering accurate market intelligence. Strategic sourcing manager job description position summary sourcing manager to be responsible for the companys end to end sourcing of products and services essential for our operations. In the services industry, strategic sourcing refers to a service solution, sometimes called a strategic partnership, which is specifically customized to meet the clients individual needs.
Strategic sourcing decision making is the scope of this master dissertation. Strategic purchasing requires significant levels of cooperation between buyer and supplier. Strategic sourcing reflects the integration of procurement or sourcing strategy with corporate strategy porter 1998. This uses the data gathered to develop and screen potential strategic procurement options for their suitability, acceptability, and. Surprisingly,elsewhere in the world,the purchasing word remains prevalent. The strategic procurement planning approach described in this note follows three main steps. A successful sourcing strategy requires a thorough understanding of a companys business strategy, the resources required to deliver that strategy, the market forces and the unique risks within the company associated with implementing specific approaches. The phrase strategic sourcing was coined and is used when the activities of sourcing are directly tied to.
By analyzing both historical and current data on the available suppliers currently operating in the marketplace, a manufacturer will estimate the depth of the. A method of managing procurement processes for an organization in which the procedures, methods, and sources are constantly reevaluated to optimize value to the organization. The concept is created to help supply chain managers and practitioners to improve, develop and implement strategic sourcing strategies. Strategy sourcing is an approach to procurement whereby the business needs of the organization are matched with the supplier market. Category management and strategic sourcing defined category management is an approach the federal government is applying to buy smarter and more like a single enterprise. Holistic, longterm and systematic are the three terms that best describe strategic sourcing. Strategic sourcing is an institutional procurement process that continuously improves and. By our definition, strategic sourcing is an organized and collaborative approach to leveraging targeted spend across locations with select sup pliers that are best suited to create knowledge and value in the customer supplier interface. Purchasing is the process of acquiring goods and services. In addition, the individual will be responsible for all phases of sourcing that require the. Strategic sourcing versus procurement your business.
Drive faster roi with your sourcing solutions by tapping our teams. Strategic sourcing helps to reduce the total cost of purchasing while maintaining quality and service. It supports a closedloop, digital, and sourcetocontract process for direct materials sourcing. In may 2005, omb and the office of federal procurement policy issued a memorandum requiring federal agencies to identify commodities that the government could efficiently purchase through strategic sourcing. Definition spend analysis is the process of collecting, cleansing. Sourcing, from a strategic point of view, can be define as a. Oct 07, 2019 strategic sourcing is a specialty area whose potential and profitability is just beginning to be realized. If this option is not selected, pdf creation is suppressed. When done correctly, it allows the organization to identify opportunities to leverage buying power, reduce costs, improve operational performance and. The strategic role of the purchasing function strategic. Without a strategic approach, no overall view of the sourcing costs and efficiency is taken and the profits of the business are effected. It is much more than simply centralizing procurement.
A systematic and factbased approach for optimizing an organizations supply base and improving the overall value. Pdf strategic sourcing, sourcing capability and firm performance. As many in supply chain management know, sourcing and procurement professionals are tightly linked to value in the supply chain. The best strategic sourcing decision may be to not make a purchase at all russel, 2009.
Integrate sourcing, contracting, and supplier information and performance management with sap ariba strategic sourcing suite. What it is strategic sourcing is in fashion these days, but it also delivers real value to recruiting teams, so it is here to stay. Strategic sourcing methodology pdf semantic scholar. The cips body of knowledge is eloquent on the definition of purchasingbut was scant on the definition of procurement. A longterm perspective between the buyer and supplier increases the intensity of buyersupplier coordination. By our definition, strategic sourcing is an organized and collaborative approach to leveraging targeted spend across locations with select suppliers that are best. Strategies are selected based on realtime circumstances of each acquisition and influenced by factors such as the value of spend, risk in the category and the supply market character. Strategic sourcing is the dynamic delivery of internal and external, business or itoriented resources and services to ensure that business objectives are met. Strategic sourcing is one aspect of supply chain management scm, which encompasses the whole flow of bringing in materials from suppliers and managing the use of information and finances in. It is concerned with what needs to be purchased, why, when and where. Definition of sourcing the 2 main sourcing definitions. General motors initiated systematic strategic sourcing in the. Federal office of management and budgetgsa strategicsourcing. Strategic sourcing is a method of managing procurement processes for an organization in which the procedures, methods, and sources are constantly reevaluated to optimize value to the organization by allowing them to buy more effectively and efficiently.
Strategic sourcing refers to making supply chain management decisions with the intent to create distinctive value and to achieve a competitive advantage. Strategic sourcing involves taking a strategic approach to the selection of suppliers an approach that is more aligned with the organizations competitive strategy. Based on theory derived from academic articles and books, students in groups of 34 wrote one chapter for the overall course book with the joint ambition to describe and discuss the state of the art of strategic purchasing today. Sourcing is a critical activity used at both tactical and strategic levels. Traditional procurement focuses on finding the lowestcost suppliers. The supply chain logistics course will cover transportation, warehousing and inventory, and logistics network design. Strategic sourcing helps an organization build longterm relationships with its suppliers. Strategic sourcing is a sourcing method that involves applying different strategies while sourcing products or services. In some industries, sourcing is considered a core operational process that is important to a firms competitive advantage. Strategic sourcing decisions are, for example, makeor buy decisions and supplier selection. For supply chain managers looking to maximize the effectiveness of todays complicated supply chains, strategic sourcing is a body of knowledge that can help increase efficiency and reduce costs. Developing and implementing a strategic sourcing strategy.
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