Strategic Sourcing Process Overview

Study Notes

Strategic Sourcing Process

Strategic sourcing involves a systematic approach for obtaining goods and services, encompassing procurement, decision-making, and assessment.

Understanding the Spend Category

The first step in strategic sourcing involves analyzing the spend category and collecting comprehensive data on expenditures.
Key areas to analyze include total expenditures, expenditure breakdowns by item and sub-item, expenditure by division/department, expenditure by supplier, and future demand projections.
Stakeholder identification across various functions (e.g., logistics, marketing, environmental) is crucial.

Supplier Market Assessment

The second step involves conducting a comprehensive assessment of the supplier market.
This analysis examines the supplier landscape, market trends, pricing strategies, and sub-tier markets.
It assesses risks and opportunities within the supplier marketplace.

Supplier Survey

The third step involves analyzing both incumbent and potential substitute suppliers.
This analysis focuses on evaluating supplier capabilities, skills, and expertise.
Should-cost analysis can be employed to minimize costs if applicable, but conservative approaches are appropriate for certain spend categories.

Building the Strategy

This step combines the previous three steps to develop a sourcing strategy.
The strategy tailored to each region or category, considering factors like market willingness, client support for incumbent suppliers, and substitute options.

RFx Request

The competitive approach uses requests for proposals (RFPs), requests for quotes (RFQs), or similar documents to solicit bids from prequalified suppliers.
This stage outlines requirements for suppliers, defining specifications, delivery needs, assessment criteria, pricing structures, and financial terms.

Interaction Plan

The interaction plan ensures engagement and equal competition among suppliers by fostering communication and providing a level playing field.
Supportive follow-up messages can motivate supplier responses.

Selection

The final stage involves evaluating supplier responses and selecting the most suitable suppliers.
Negotiations may be conducted electronically to refine terms and conditions.

Quantitative Measures

Key quantitative performance measures for supply chain success include lead time, response time, flexibility, resource utilization, and delivery performance.
A multi-dimensional approach for improving supply chain performance addresses diverse customer requirements.

Description

This quiz covers the strategic sourcing process, highlighting the key steps involved in obtaining goods and services. It delves into spend category analysis, supplier market assessment, and the importance of stakeholder identification. Test your understanding of strategic sourcing principles and practices.