Monday, December 6, 2010


Strategic sourcing is a process that determines the business' needs and plans for acquiring the necessary raw materials and services for the business. It continuously improves and re-evaluates the purchasing activities of a company. Strategic sourcing techniques are also applied to non traditionSTRATEGIC SOURCINGal area such as services or capital.
It can have a profound impact on a company’s a and can strongly influence the purchasing and procurement processes.
The steps in a strategic sourcing process are:
• Assessment of a company's current spend (what is bought where?)
• Assessment of the supply market (who offers what?)
• Total cost analysis (how much does it cost to provide those goods or services?)
• Identification of suitable suppliers

Development of a sourcing strategy (where to buy what considering demand and supply situation, while minimizing risk and costs)
• Negotiation with suppliers (products, service levels, prices, geographical coverage, etc.)
• Implementation of new supply structure
• Track results and restart assessment (continuous cycle)
An integral part of strategic sourcing is procurement. Procurement can be defined as the purchase of merchandise or services at the optimum possible total cost in the correct amount and quality. These good and services are also purchased at the correct time and location for the express gain or use of government, company, business, or individuals by signing a contract.
The process of acquisition of goods or services required as raw material (direct procurement) or for operational purposes (indirect procurement) for a company or a person can be called procurement. The procurement process not only involves the purchasing of commodities but also quality and quantity checks. Usually, suppliers are listed and pre-determined by the procuring company. This makes the process smoother, promoting a good business relationship between the buyer and the supplier.
Individual businesses set procurement policies that govern their choice of suppliers, products and the methods and procedures that are going to be used to communicate with their suppliers.

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