The very first stage to go through when conducting a Strategic Sourcing program is to define or refine which items are to be included in a Sourcing Group. It is the first of 4 analysis to be performed when ‘profiling a Sourcing Group‘ (Strategic Sourcing Step 1):
- Defining Sourcing Groups
- Analysing Sourcing Group Characteristics
- Understanding Sourcing Group Markets
- Analysing potential evolution of the Sourcing Group Characteristics and Markets or substitution products/services
So, how do you define a Sourcing Group?
Let me first remind what a Sourcing Group is:
A Sourcing Group is a Group of purchased goods/products/services that are likely to be sourced from the same set of suppliers, partially or fully, using the same purchasing strategy
The way to identify a Sourcing Group consists in validating one or several of following 6 criteria:
- Similar supplier source
- Similar production processes
- Similar use or purpose
- Similar material content
- Similar specifications
- Similar technology
Once you have defined your Sourcing Groups, you can proceed with collecting data to qualify your Sourcing Groups. In a next post I will remind you what data are interesting and where to find them.