In the current situation, with globalization, competitiveness and flexibility playing a crucial role in the activities of every company, the ability to find and keep strong relationships with reliable suppliers has become essential.
Scouting for new suppliers, as pointed out in our article “The importance of looking for alternative suppliers”, allows companies to obtain competitive advantages through access to high quality resources, innovative services and materials essential to their supply chain.
Strategic Sourcing
Strategic sourcing is the process with which companies identify, evaluate and select new suppliers in order to meet their operating requirements.
This process goes beyond simply choosing the supplier offering the lowest price; it focuses on creating a long-term partnership based on mutual trust, quality of products/services and capacity for innovation. It also consolidates purchasing power, increases sustainability and aligns work and information flows in strong teamwork.
Sourcing is not an activity that is an end in itself and which is finished: it is a systemic process which continuously re-evaluates the activities linked to a company’s purchasing, in the pursuit of continuous improvement.
The sourcing process therefore relates to all activities which help to find the best suppliers for certain goods and services, as the basis for effective procurement.
The importance of strategic sourcing
Why use sourcing? There are many advantages for a company which applies a strategy of continuous scouting for suppliers:
- Promotion of lasting partnerships with suppliers. Limiting the number of suppliers allows the creation of contracts which favour both parties, also promoting standardization and consequently improving costs and times
- Improved quality and innovation. Finding new suppliers may result in the introduction of new technologies, materials and production methods, improving the quality of the end products.
- Reduced costs. Careful scouting allows companies to find suppliers which offer high quality products at competitive prices
- Supply chain diversification and risk reduction. Depending on a single supplier is a big risk. Continuous scouting for new suppliers helps to reduce the risk of breaks in the supply chain, particularly in a crisis.
- Flexibility. Working with innovative, reliable suppliers can help to improve a company’s ability to quickly adjust to market changes.
Strategic sourcing: the steps
What exactly is the strategic sourcing process?
- Internal needs analysis: clearly defining in detail the product and service requirements.
- Research and identification: identification of potential suppliers by means of research and sending qualification questionnaires.
- Supplier evaluation: evaluation of partners based on objective criteria such as quality, production capacity, financial health, etc.
- Selection and contract signing: once the best supplier has been selected, contractual negotiations begin.
- Monitoring and supplier relationship management: supplier performance must be constantly measured and the supplier given feedback to encourage it to always improve its performance.
Technology & Scouting
In this area too, technology allows a faster, more efficient process.
How can IUNGO help you?
- With the Purchase Requests and Bid form you can compare and negotiate bids received from your suppliers in real time, in a guided and immediate way, always with the guarantee of complete traceability and transparency of purchase tenders
- The Qualification Process form makes available the qualification status of the entire pool of suppliers at the start of purchase tender processes.