WhatisStrategicSourcing?

Definition:Asystematicandfactbasedapproachforoptimizinganorganization's
supplybaseandimprovingtheoverallvalueproposition.

Whatitis

WhatitisNOT

FocusedontheTotalCostofOwnership(TCO)incorporating
customerneeds,organizationalgoals,andmarketconditions

FocusedONLYoncost

G tti th b t
Gettingthebestproduct/serviceatthebestvalue
d t/
i
t th b t l

G tti th h
Gettingthecheapestproduct/service
t
d t/
i

Drivenbyarigorousandcollaborativeapproach

Adhocactivitiesinvolvingonlypurchasing

Addressesallleversforsavings

Focusedonbeatingupsuppliers

Decisionsbasedonfactbasedanalysisandmarket
Decisions
based on fact based analysis and market
intelligence

Decisionsbasedonopinion,unjustifiedpreference,
Decisions
based on opinion unjustified preference
orcomplacency

Acontinuousprocess

Aonetimeprojectordecision

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ScopeofStrategicSourcing?
Thescopeofstrategicsourcingextendsbeyondsupplierpricenegotiationandtakes
intoaccountthetotalcostofownership
Amountpaidtosuppliers

Purchase
Price

Demand
Drivers
Specifications
ocu e e t
Procurement
Practices

InternalPolicies
&Procedures

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Internal
Processes

Inventory
Inventory
Practices

Operational
Operational
Practices

Total
acquisitioncost

AdvantagesofStrategicSourcing?
Create
C
t
partnerships
with
suppliers

Access
tonew
suppliers

Bestpractice
sharing
Costsavings

Strategic
Sourcing

Improve
operational
efficiency
ffi i

Spec
Standardize
pricing

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Increase
quality

ObjectivesofStrategicSourcing?
Objectivesofstrategicsourcingsurroundthereductionofcostwhilemaintaining
Obj
i
f
i
i
d h
d i
f
hil
i i i
orimprovingquality
Improvethevaluetoprice
p
p
relationship(i.e.achievecost
reductionswhilemaintainingor
improvingquality/service)

Understandcategorybuying&
U
d t d t
b i &
managementprocesstoidentify
improvementopportunities

Objectives
Examinesupplierrelationships
acrosstheentireorganization

Develop&implementmultiyear
contractswithstandardizedterms
andconditionsacrossthe
organization

Leverageentireorganizationsspend

Sharebestpracticesacrossthe
Share
best practices across the
organization

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