Strategic sourcing supports more cost-efficient procurement, informing decisions when engaging suppliers by evaluating all of the factors that contribute to suppliers’ delivery. The process involves category and market research, capability assessment, tender management processes, negotiation and performance tracking to make sure clients have the best supplier base at the right cost. By utilising a formalised structure for strategic sourcing, companies can maximise cost savings throughout their purchase activity while ensuring all processes align with their overall business goals.
At Vendigital we have a clear and proven strategic sourcing methodology, which combines our consulting expertise and digital platform to ensure the right suppliers are identified, assessed, shortlisted, negotiated and nominated.
Analysing the sourcing category
This initial stage of analysis comprises determining current market prices, spending volumes, patterns and types, and the stakeholders, departments and processes involved.
Completing market analysis
This step involves analysing the supplier market and creating a database of potential and current partners. By developing an understanding of buyer power through this supply market analysis, an aligned sourcing strategy can be produced, which fits best with the sourced product or service.
Supplier capability assessment
An effective sourcing strategy considers current and potential suppliers, the minimum requirements needed, and the corresponding selection criteria and ensures these are consistent with the business’s goals. We conduct commercial evaluation, which includes factors such as manufacturing footprint, accreditations, capacity, and product capability as well as a technical evaluation focusing on part related requirements, such as required technology, specifications and tolerances.
Firstly, we conduct a supplier audit, which can include site visits, to evaluate a number of factors including supplier quality management, material management, audit manufacturing process and capability. Following this we conduct a pre-RFQ review before the request for proposal (RFP) stage.
We conduct the RFP process in a proven and transparent way, utilising bespoke tools and templates. This provides our clients with a tailored and robust process focused on creating an optimal supplier base.
In addition, we are able to utilise our cost and value engineering expertise to conduct should cost modelling, creating a bottom-up cost model as the basis on which to challenge supplier pricing.
Supplier negotiation and nomination
Following the completion of the tender process we then enter into negotiations with shortlisted suppliers. We use our experience with procurement negotiations, combined with our industry knowledge, to select those suppliers who are the best fit. Nomination of suppliers can include multi-functional sign-off e.g. Procurement, Logistics and Finance.
Implementation and integration
Once suppliers have been nominated, we conduct an implementation and onboarding phase to ensure seamless integration with clients’ current operations. The suppliers’ level of involvement in the business will depend on the complexity or volume of the product or service provided.
The strategic sourcing process continues even after suppliers have been onboarded, using ongoing performance tracking via specified metrics to ensure their delivery is optimised for the business’s requirements. Ongoing performance tracking also enables any issues to be quickly identified, minimising the impact on the business.
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The benefits of best practice
Strategic sourcing is a process designed to improve cost efficiencies within a business. However, the understanding gained from this in-depth analysis of the supplier market leads to further valuable benefits. With our extensive consulting expertise and proprietary digital platform, we can support clients in maximising the potential benefits of the strategic sourcing process.
Increased cost saving
By supporting clients with achieving a thorough understanding of the supplier market, we can help them identify opportunities for savings. Furthermore, by building a sourcing strategy around the business’s goals, we can ensure supplier delivery is aligned with your requirements for a more efficient use of resources.
Improved business resilience
Using strategic sourcing, we can help companies identify the risk factors in the supply market, providing the opportunity to create strategies that mitigate them and ensure the company’s activity is not negatively impacted by these external factors.
Better supplier relationships
Identifying and selecting the suppliers that are the best fit for your company through the strategic sourcing process provides a foundation for strong supplier relationships, which leads to improved productivity and efficiency and an overall higher standard of output.
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