Strategic sourcing is a powerful tool for streamlining operations, reducing costs, and building an enduring competitive advantage. It is an excellent tool to use, but you must be systematic about it. Here are a few practical steps to implement a strategic sourcing process.
Define your sourcing strategy
It would help if you decided what you wanted to achieve through your sourcing strategy. What are your sourcing goals? Which business outcomes are you trying to optimize? Now, more specifically, what are you trying to achieve through strategic sourcing? What are the key benefits you expect from implementing a strategic sourcing strategy?
If you’re not sure yet, it’s probably a good idea to get some feedback on what you’ve said so far. Someone with a practical perspective on business could help you ensure that you’re not aiming too high or too low. Someone who has done strategic sourcing before could also help you determine where you’re missing the mark—someone who, ideally, does both of those things all the time.
Build your sourcing toolbox
Second, you must build the toolbox to help execute your sourcing strategy. That might sound like an obvious step, but it’s often an area where companies fall short during the implementation phase:
- You’ll want to select a sourcing strategy that best fits your business needs and dynamics. You don’t want to select a strategy that is ideal for one industry but does not work in another.
- You’ll want to select the right sourcing strategy for your organization. Some companies might need to source in a particular country or region. Others might have a particular type of product they prefer to source.
- You’ll want to select the right sourcing strategy for your stakeholders.
Your stakeholders will have different priorities and expectations. You must consider their concerns if they have a particular role or title.
Train for success
This may be the most overlooked step in the process at the strategic sourcing execution level. This is especially true for senior leaders who are often focused on strategy and haven’t spent much time on execution. To be successful with strategic sourcing, you need to ensure that the people who make up your sourcing team are trained in their roles and responsibilities. Senior-level decision-makers need to understand how their activities support the strategy. What is their role, and how does it support the strategy?
You also need to train your sourcing team for day-to-day execution. You can’t expect them to have all the correct answers. They need to know where to go when they get stuck. They need to know how to seek help when they need it. Most of all, they need to know they’re part of an execution team—not the strategic plan.
Implement, Measure, And Improve
This is where the rubber hits the road. You need to put what you’ve learned into practice to see if it works. First, you need to implement it. This is where you start sourcing. You’re only halfway there if you’re reading about it. Then you’re only halfway there. Now, you need to measure. What are you measuring? What are you tracking? Why are you tracking it? What are you tracking?
Next, you need to improve. What do you need to change? What are you changing? When do you need to change? How do you need to change it? You can’t just hope for the best. You have to hope for the best, but you must be prepared for the worst. Depending on the sourcing strategy you select, your sourcing strategy could result in some disappointing business outcomes.
Have A Project Champion
You’ll need a project champion if you’re serious about this strategic process. This person must be accountable for implementing, measuring, and improving your sourcing strategy. Also, these people need to fully immerse themselves in the process and solve problems as they arise. Ideally, this person is a business executive who understands the value of sourcing as a competitive advantage and is willing, to be honest about the process’s strengths and weaknesses.
Ensure Transparency Throughout The Process
For your strategic sourcing effort to thrive, you’ve got to make it transparent from the start to the end. You’ve got to set up a transparent process for reporting performance, basing metrics on actual results, and being accountable for the process’s shortcomings. This is critical for building a sustainable competitive advantage. If you want to build a business driven by a long-term strategy, sourcing is a great way to achieve that goal.
Bottom Line
Strategic sourcing can help you build a lasting competitive advantage. By sourcing strategically, you can cut costs, improve delivery times, and get more done with fewer people. Suppliers become partners and help you achieve your goals. What matters most is getting the strategy right and consistently applying it.