What is Strategic Sourcing?
According to businessdictionary.com strategic sourcing is defined as “A method of managing procurement processes for an organization in which the procedures, methods, and sources are constantly re-evaluated to optimize value to the organization.” To add on, strategic sourcing allows organizations to leverage their purchasing power so they can achieve the best value for spend. It can be said that one of the main aims of strategic sourcing is to manage the bottom line while promoting cost reductions.
Benefits of Strategic Sourcing
With an understanding of what strategic sourcing is, here are some of the numerous advantages of the process:
- Strategic sourcing improves operational efficiency
- Strategic sourcing assists in solving business problems while getting goods to market in a timely manner
- Strategic sourcing promotes constructive and healthy competition between suppliers
- Strategic sourcing provides you with a way to manage supplier-related risk without compromising on compliance issues
- Strategic sourcing allows for a detailed analysis of the organization’s spend profile and the supply market
- Strategic sourcing provides visibility into the supplier base and its pricing which leads to execution of procurement plans based on the lowest cost of ownership
e-Sourcing Tools That Promote Strategic Sourcing
For those new to procurement, the best way to get started is to invest in a good suite of software tools to lighten your workload. Fortunately, ProcurePort offers a range of easy-to-use e-sourcing tools that can help you with strategic sourcing in supply chain. Our software is designed to reduce the time spent sifting through the different supplier bids, quotations, and invoices. Technology is redefining the procurement industry and with a potential ROI of 720% it’s not hard to see that e-sourcing procurement tools may just be the future of procurement. So, what are some of these tools?
If you have ever witnessed an auction in person, you may be familiar with the fast-paced nature of the system. The bidding is intense as each party attempts to out-do the other. In most cases the winners are often bidders with the most experience, financial muscle, and ambition. Taking this very practical concept online, procurement tech experts have created reverse online auction software.
This software allows suppliers to bid on contracts in real-time. For those looking to procure goods and services it’s an excellent and invaluable tool that serves to push the prices down as the competition escalates. What’s more, the cost savings from this initiative can be anywhere from 18% to 40%.
RFI, RFP, and RFQ are some of the most common terms used in procurement. They stand for Request for Information, Request for Proposal, and Request for Quotation. It’s not unusual for businesses to issue suppliers with these requests at the onset of procurement. However, as can be imagined without the right templates, attempting to sort your way through the returned data can be cumbersome.
Thanks to ProcurePort’s streamlined RFI, RFQ and RFP templates, you can consolidate all answers in one place. The automated templates can even score the information and present it in a coherent manner thereby simplifying the entire procurement process. Integrate these templates into your strategic sourcing plan for a hassle-free procurement operation.
3. Contract management
Once you’ve identified your suppliers the work doesn’t end there. Contracts need to be signed to proceed. Again, you can take advantage of contract management software that’s availed to you to keep documentation in a centralized place. By automating the paperwork, you can cut down on human error.
Contract management software also allows you to store supplier data, monitor trends and performance from anywhere. Collaborate with your vendors in real time and internal stakeholders. This software promotes transparency and boosts efficiency for everyone involved in the supply chain.
Request a Free Demo of ProcurePort Software
Do you want to learn more about what is strategic sourcing and ProcurePort’s e-solutions? Contact one of our solutions specialists to learn more. Alternatively, you can also request a free demo to see our software in action.