How to ensure agile strategic sourcing in a changing market?

June 25th, 2024
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In a constantly shifting economic landscape, companies must continuously adapt their procurement strategies. As various crises multiply and market volatility reaches record levels, organisations want more than ever to stabilise their supply chain. This is how agile strategic sourcing is emerging as an essential lever to achieve this across all sectors of activity.

What is strategic sourcing?

Strategic sourcing activities involve selecting suppliers that meet a company’s requirements, specifications and business needs, whilst minimising costs and risks. It is a complex process that encompasses data gathering, expenditure analysis, market research, negotiation and contract awarding.

Unlike conventional procurement, strategic sourcing focuses on analysing the entire lifecycle of a product and/or service, going far beyond its purchase price. This means applying different sourcing strategies when purchasing goods and services:

  • Local sourcing;
  • Crowdsourcing;
  • Outsourcing;
  • Etc.

It is a holistic approach to managing supply, the main objective of which is to improve profitability. Through strategic sourcing processes, procurement professionals become more effective across all procurement categories, but they also reduce their supply risks.

It is also important to remember that strategic sourcing considers suppliers as value partners and aims to build long-term sustainable relationships with them.

What are the benefits of strategic sourcing?

Strategic sourcing focuses on the overall value suppliers can bring, with four main benefits.

Cost optimisation

Strategic sourcing focuses on the concept of Total Cost of Ownership (TCO). With this in mind, procurement departments refine their supplier selection, improve expenditure management and conduct more strategic negotiations, enabling them to achieve significant savings.

Alignment between organisational objectives

This analytical approach helps to better align corporate objectives and issues with procurement strategies. The result is improved business performance, greater efficiency and reduced risk.

Supplier optimisation

Thanks to strategic sourcing, procurement departments carefully choose their suppliers with a view to creating value. This is reflected in particular in the quality of the products and/or services purchased, as well as the relationships maintained with these suppliers.

Building long-term supplier relationships

Lastly, this approach creates synergy between a company and its suppliers. This implies solid communication between stakeholders, as well as proper supplier management.

How to make strategic sourcing more agile?

By its very nature, strategic sourcing is an essential foundation for adapting with agility to market fluctuations. Two key steps stand out in achieving this: Process standardisation and data analysis.

Standardising the agile sourcing process

Sourcing process standardisation enables faster and more uniform execution of tasks, through the implementation of clear, streamlined procedures. This common foundation allows companies to improve communication between teams, increase responsiveness and react quickly to sudden market changes.

To promote agility, it is also important to implement a feedback system that will facilitate feedback from teams, as well as the continuous evolution of processes. In this sense, strategic sourcing is fully part of continuous improvement.

The role of data analysis

Strategic sourcing relies on in-depth analysis of markets as well as of a company’s current and potential suppliers and supply chain. This approach is crucial to identifying patterns, anticipating future trends and assessing potential risks, thus providing a solid basis for decision-making.

Thanks to the latest technologies, companies are able to collect and analyse large volumes of real-time data. Data analysis, including predictive analytics, helps optimise sourcing strategies, anticipate changing needs, and respond promptly to any type of event.

What are the best practices for improving strategic sourcing?

To improve their strategic sourcing, companies rely on well-known best practices, from supplier diversification to the adoption of digital solutions.

Diversifying supply sources

This means broadening the supplier panel to ensure greater resilience to market fluctuations. The idea is to list several suppliers who are able to meet the same need. This is known as “dual sourcing” or “multiple sourcing”. In addition to better risk management, companies can avoid any dependence on one supplier and gain negotiating and purchasing power.

Developing strategic partnerships

For a company, forging strategic partnerships encourages:

  • Co-creation;
  • Joint search for innovative solutions;
  • Better management of contingencies.

This relationship built on trust and collaboration makes it possible to explore new opportunities and adapt more quickly to changes, while minimising operational risks and boosting supplier performance.

Process automation

By encouraging automation, companies simplify processes and accelerate workflows. For procurement departments, this enables teams to act faster and free up time to focus on continuous improvement and supplier evaluation. This is how they can develop and refine their sourcing strategy and secure the best possible deals.

Adopting dedicated strategic sourcing software

Companies have every interest in adopting strategic sourcing software. Indeed, such a tool makes it possible to:

  • Facilitate procurement;
  • Streamline processes;
  • Provide teams with full visibility.

For example, it helps to issue calls for tenders, providing a competitive setting for suppliers, online and in real time. This is a great lever to reduce negotiation cycles and to achieve cost savings. Companies can thus gain efficiency, minimise supply risks and save both time and money.

In a constantly changing market, strategic sourcing is a major asset for companies. To fully implement this approach, they need to activate key levers and apply best practices. By integrating these elements, they will be able to adapt and to successfully navigate such an environment.

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