Written and Developed by Keith Howard
Develop and maintain a viable portfolio of suppliers capableof meetingcompany objectives in a market driven environment.
Align business objectives and functional resources to thesupply chain. Guidethe strategic relationship between the organization and itssuppliers.
Satisfy market demands
– Understand the customer and understandthe market as key drivers of the sourcing strategy. Define whatproduct the customer wants, determine the size and timing of therequirement, its application, decide if it fits the company’s productlines and resources or involves a new or emerging technology. These inputs offer the means to compare and establish vendorcapability criteria.
Meet inventory investment objectives
– Cost of the product and orderpolicy have the greatest affect on sourcing strategy inconsideration of inventory investment goals. Unlike the keydrivers in sales and marketing, investment in inventory iscalculated; internally controlled through product costs andmanipulated with order policy. Target product costs are achievedthrough negotiation, the competitive bid process, shortening thesupply chain, or moving to lower cost centers; a somewhat finiteset of tactics which are easy to exploit. Conversely, order policyinvolves numerous iterations of internal inputs with the potential tostress upstream providers. Internally controlled inputs into thepolicy, (forecasts, safety stock, lead-time, make/buy decisions),and their implication to vendors, (pull in, push out, smaller orderswith greater frequency, spikes), makes order policy complex.Consequently, considerably more deliberation is needed inestablishing vendor criteria as well as the management of company/supplier relationships.