A strategic sourcing consultant is a person that helps other businesses to find the right suppliers for the items they need. In most cases, companies will engage a strategic sourcing consultant when sourcing from another country.
Strategic sourcing is the formalization of information gathering in the procurement process to find the best value. It leads to the alignment of the sourcing strategy and an organization’s business goals.
The person working as a strategic consultant is charged with mitigating risks on behalf of the client. They are trained in international trade and their experience helps in handling unforeseen contingencies. Common risks in sourcing include language and cultural differences, the regulatory environment in different countries, uncertainty about quality, price instability, and geopolitical risks.
Having a list of suppliers from a certain region or country is not enough. There are numerous factors to consider beyond contacting a supplier. The strategic sourcing consultant is much more than just an intermediary. Here is how they add value and can change your procurement game.
Developing a Sourcing Strategy
A strategic sourcing consultant uses their training and experience to help clients sharpen or develop new sourcing strategies. They understand the variables at play in a given sector, country, or season and advise accordingly. For instance, they may advise on the benefits of ordering in bulk or smaller quantities, depending on such things as seasons, shipment costs, and so forth. They would understand the implications of working with many suppliers or a single supplier. Their work is to help the client come up with the most efficient way of sourcing and implement that chosen path correctly.
Quality Standards Control
Working with a strategic sourcing partner helps companies get assurances that the chosen supplier’s products meet the quality expectations of the buyer. Sometimes the quality standards expected by law differ between countries. This results in the likelihood of goods sourced from one country being rejected in the destination country. The strategic sourcing consultant does diligence to prevent such eventualities.
Strategic sourcing consultants also the quality history of suppliers. They are well placed to vouch for the most reliable suppliers to work with, especially when there is not much time to carry out detailed checks. This can go a long way to help develop long-lasting supplier relationships.
On numerous occasions, the initial budgeted procurement costs are lower than actual final costs due to unforeseen fees, foreign exchange movements, and misunderstandings with suppliers. Marginal budget overruns could translate to thousands of dollars for a mid-sized company. The experience of strategic sourcing consultants helps to make accurate predictions and calculations of procurement costs. There is little likelihood of unforeseen costs. In fact, consultants with a good relationship with suppliers can help lock in prices to eliminate volatilities for a certain period.
Sometimes, unforeseen costs arise due to the business culture differences in various countries. For instance, it may be customary to give gifts and tips in a certain country. Consultants are aware of such things, and they advise accordingly.
Handling Delivery Smoothly of Items
Shipping goods can be a complicated affair. There are many factors to consider, including costs, safe handling, expiry dates, and arrival ports. When they reach the destination country, they need clearance before being taken to a warehouse. Working with a strategic sourcing partner allows a business to outsource this puzzle to a third-party expert. They are charged with finding the right vessel to ferry items safely. They can give an accurate prediction of arrival dates and safe handling onboard. In fact, some consultants assume the risk while the goods are in transit so that if anything happens, they bear the costs. For a small business, this assurance provides peace of mind.
How Does a Typical Strategic Sourcing Consultancy Work?
If you are a business that wants to begin working with a sourcing consultant, they are likely to first ask for the procurement categories your business uses. They will examine your spending patterns to see priority areas and how your current procurement process works.
The next step would be the development or refinement of the sourcing strategy. Based on this, the consultant would come up with a list of suppliers. The consultant would then be involved in sending out requests for proposals from the companies in the supplier portfolio. After receiving proposals, the consultant assists with negotiations and selection of suppliers.
The final step is the onboarding of suppliers and drawing up contracts. This is a delicate process because both parties will have concerns, terms, and expectations. The consultant would help in ironing out any issues or advising on the best route to follow to resolve them. Throughout the life of the contract, the strategic sourcing consultant helps to track and review the performance metrics of suppliers. The sourcing plan may also need adjustments as business priorities shift and the operating environment changes.
How to Select a Strategic Sourcing Partner
As shown, strategic sourcing consultants come in to help your procurement team perform better. They are experts in the field, and they keep up with changes in the regulatory environment. Besides helping with paperwork, they can help different teams in your company work more symbiotically. For instance, the logistics team, marketing, and quality assurance team may be pulling in different directions. The consultant can help craft a common strategy for the entire team.
When picking a strategic sourcing consultant, it’s important to pick one who is independent. They should not appear to hold a brief for any supplier. It’s best to seek reviews from companies that have worked with them before. This will help understand their working style, areas of expertise, and whether they are independent.
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