Strategic Sourcing Essay

STRATERGIC SOURCING/PROCUREMENT

Strategic sourcing is the development of relationships between the supplier and the management to acquire goods and services for the needs of the business. In the past SOURCING was termed as PURCHASING. The term SOURCING implies a more complex process suitable for products which are strategically important.
Today due to the competition and the emerging new technologies, competitiveness between firms is vastly observed; therefore acquisition of the best available capabilities inclusive or exclusive to the organizations is given vital consideration.
In such matters sourcing is not only taken at the level of management but also considered a crucial element of the survival of the business and given high importance.

INTEGRATION: STRATEGIC PROCUREMENT AND COMPETITVE ADVANTAGE Integration of strategic procurement and competitive advantages in an organization leads to basic competencies such as having access to raw materials, suppliers with an effective system for measuring quality of products supplied; develop advantage over competitors in relationship with suppliers, working close together with suppliers on product development efforts and close working relationship with suppliers to improve each other’s processes.

This will foster benefits for both company and the supplier organization, while providing the maximum transaction value in the long run. Sourcing or procurement is the main aspect of a business organization when considering inputs. Sourcing is the methodology of finding the right supplier, right product, in the right time, at the right price, in correct quantities and right qualities. Sourcing strategy can be illustrated in the following process.
Supplier  Inputs  Process  Output 

1. Identify suppliers
• Locate best quality supplies at the lowest possible cost, from a suitable supplier.
• Considering suppliers as business partners ease the job of souring alone.
• Suppliers with good brand image can add more value to the products which will boost sakes and increase good will and competitiveness of the product in the market.
2. Cultivate relationships.
• Long term relationships with suppliers can create win – win situations in many business encounters.
• Customers are more educated and precise about what they need and want, they are concerned with business practices and even environmental aspects, therefore a supplier with high environmental concern and good business practices will bring advantages to the organization.
3. Understanding and embrace possibilities
• Improvement in the global business arena leads to the development of supply chain management and sourcing.
4. Continuously improving skill

EXAMPLE

Walmart's successful supply chain management
With these kinds of numbers, having an effective and efficient supply chain management strategy and system is imperative. The entire organization is committed to a business model of driving costs out of supply chains to enable consumers to save money and live