Are you wondering what you will get by conducting a Strategic Sourcing program?
To make a long story short, here is… an answer.
Bottom line, running a Strategic Sourcing program is meant to optimize ‘your’ Purchasing Department performance by improving 3 major business components i.e. the cash flow, the total costs and the quality and the services delivered. To be able to do so, you will actually create value in three main domains as follows:
- in your purchase demand management, by
- 1. Optimizing specifications,
- 2. Reducing consumption,
- 3. Consolidating spends.
- in your supply-base management, by
- 4. restructuring your supply base,
- 5. increasing competition
- 6. adjusting your relationship with suppliers.
- in your total cost management, by
- 7. Reducing transaction costs,
- 8. Reducing the Total Cost of Ownership
- 9. Reducing the total cost of Supply Chain management.
The Strategic Sourcing Magic triangle is a nice way to represent the value one can created with strategic sourcing:
Click to enlarge