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Strategic Sourcing Plan

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Six Steps To Create Strategic Sourcing Plan.

There are various ways to create a strategic sourcing plan.  Some have six steps, others may have eight or nine steps.

Creating a strategic sourcing plan involves several steps, including:

  1. Define your goals and objectives: Clearly define your goals and objectives for the strategic sourcing plan, taking into account factors such as cost savings, quality, and delivery times.
  2. Assess your current situation: Conduct a thorough assessment of your current sourcing practices, including an analysis of your current suppliers, contracts, and spend. Identify areas where improvements can be made.
  3. Identify potential suppliers: Research potential suppliers and evaluate them based on factors such as quality, delivery times, and reliability.
  4. Negotiate with suppliers: Once you have identified potential suppliers, negotiate with them to establish terms and conditions that meet your goals and objectives.
  5. Select suppliers: Select suppliers based on the outcomes of your negotiations and their ability to meet your goals and objectives.
  6. Implement the plan: Implement the strategic sourcing plan by establishing contracts and agreements with selected suppliers and integrating them into your supply chain.
  7. Monitor and measure performance: Continuously monitor and measure the performance of your suppliers and the strategic sourcing plan to ensure that it is meeting your goals and objectives.
  8. Continuously improve: Continuously review and improve the strategic sourcing plan, taking into account changes in the market, technology, and your organization’s needs.

It’s important to note that a strategic sourcing plan is a living document and should be reviewed and updated regularly to ensure that it remains aligned with the organization’s goals and objectives. Also, involving the right stakeholders and having a dedicated team to manage the process will be helpful to ensure the success of the plan.

The Importance of Strategic Sourcing

Strategic sourcing is an important process for supply chain management as it helps organizations to optimize their spending and improve the overall performance of their supply chain. The importance of strategic sourcing for supply chain can be summarized as:

  1. Cost savings: By identifying and selecting suppliers based on long-term value, organizations can achieve significant cost savings by reducing the total cost of ownership.
  2. Quality improvement: By evaluating suppliers based on factors such as quality, delivery times, and reliability, organizations can improve the overall quality of the goods and services they receive.
  3. Risk management: By carefully selecting suppliers and building strong relationships with them, organizations can reduce the risk of supply chain disruptions and mitigate the impact of supply chain risks.
  4. Flexibility: By diversifying their supplier base, organizations can increase their flexibility in responding to changing market conditions and customer demands.
  5. Innovation: By working closely with suppliers, organizations can identify new and innovative products and services that can help to improve the overall performance of their supply chain.
  6. Sustainable sourcing: By evaluating suppliers based on factors such as environmental and social responsibility, organizations can ensure that their supply chain is more sustainable and eco-friendly.

Overall, strategic sourcing is an important process for supply chain management as it enables organizations to optimize their spending, improve the overall performance of their supply chain, and reduce supply chain risks.

Negotiation and Procurement Quotes

  • “A negotiator should observe everything. You must be part Sherlock Holmes, part Sigmund Freud.” ~Victor Kiam
  • “This is a classic negotiation technique. It’s a gentle, soft indication of your disapproval and a great way to keep negotiating. Count to 10. By then, the other person usually will start talking and may very well make a higher offer.” ~Bill Coleman
  • “The most important trip you may take in life is meeting people half way.”  ~Henry Boyle
  • “What business strategy is all about-what distinguishes it from all other kinds of business planning-is, in a word, competitive advantage. Without competitors there would be no need for strategy, for the sole purpose of strategic planning is to enable the company to gain, as efficiently as possible, a sustainable edge over its competitors.” ~Kenichi Ohmae
  • “So much of life is a negotiation – so even if you’re not in business, you have opportunities to practice all around you.” ~Kevin O’Leary
  • “The best move you can make in negotiation is to think of an incentive the other person hasn’t even thought of – and then meet it.” ~Eli Broad
  • “You have to persuade yourself that you absolutely don’t care what happens. If you don’t care, you’ve won. I absolutely promise you, in every serious negotiation, the man or woman who doesn’t care is going to win.” ~Felix Dennis.

Supplier Management Resources

 Create Strategic Sourcing Plan