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What is Strategic Sourcing?

5 minute read

Strategic sourcing...

  • is a formal approach to procurement that allows an organization to leverage its purchasing power to achieve the best value for its spend

  • creates efficiencies across all spend categories while minimizing supplier risk

  • involves analyzing the spend profile of an organization and the supply market

  • ensures the effectiveness of an organization's procurement processes and provides visibility into the supplier base and its pricing, thereby executing procurement plans based on the lowest cost of ownership (TCO)

The strategic sourcing process serves as a roadmap to procure the goods and services the organization knows it needs to meet business requirements.

Top 5 Benefits of Strategic Sourcing

Companies that have implemented strategic sourcing successfully have established the most competitive contracts, sped up their sourcing processes, selected qualified suppliers, and minimized risk.


Increased cost savings with direct impact on the bottom line


Established a stable, reliable, and continuous source of supply


Increased cost savings with direct impact on the bottom line


Achieved a close alignment between sourcing and business goals


Minimized supplier risk and ensured compliance

Organizations can maximize their performance and gain a competitive edge over their peers by sourcing from the most capable suppliers.

The Strategic Sourcing Process

There are seven steps in the process to effectively implement strategic sourcing:


Identify and categorize spend

Create a profile defining the sourcing category or commodity


Assemble a work team

Collaborate using a cross-functional team to define strategy


Build the sourcing strategy

Decide on how and where to buy by analyzing the supply market while minimizing risk and costs


Identify and pre-qualify potential suppliers

Request supplier information, solicit bids, and identify selection criteria


Select supplier(s), negotiate, and execute the contract

Shortlist suppliers and make the final selection based on the pre-defined evaluation criteria


Implement the contract and integrate suppliers

Extensive communication and change management are vital steps to ensure a smooth implementation


Continuous measurement, monitoring, and tracking of supplier performance

Includes tracking of savings and where the supplier is adding value using a Supplier Relationship Management (SRM) process

Implementing Strategic Sourcing

Managing sourcing projects with spreadsheets is slow, error-prone and has reduced visibility for stakeholders. Strategic sourcing software solutions can increase efficiency, minimize supply risks, and achieve the required cost savings. Harness the power of automation to optimize your strategic sourcing projects.

Two main considerations when choosing the right software to automate your processes are:


Ease of use

The best solutions are those which are comprehensive but both easy to use and easy to learn with a simple interface. ProcurePort provides live support and troubleshooting service to ensure a smooth and successful implementation. Our strategic sourcing software makes procurement events easier and speedier to manage.


Seamless connectivity

Software applications must connect easily with existing enterprise tools and other systems to be successful. Online platform solutions now not only provide spend analysis tools and manage the sourcing activities but include contract negotiation support and on-going supplier management, traditionally areas where human intervention is most required.

How Software Assists in Strategic Sourcing Success

Our strategic sourcing software offers a wide range of features such as spend analysis, requests for proposals and quotes, reverse e-auctions, workflow management, supplier information management and contracting. Using our automation tools, you can manage your entire sourcing and contracting processes for both direct and indirect spend including services, all in one place.

  • Spend analysis can aggregate and classify all purchase history, segment spend and identify savings opportunities

  • Sourcing and contracting processes across teams and business units are standardized

  • Negotiated savings are fully realized across all spend categories

  • Productivity and sourcing efficiency are increased

  • Risk is reduced by contracting with the best suppliers

Get a powerful, intuitive digital procurement platform for less.

Our cloud-based web application and portals connect buyers with suppliers through a variety of strategic sourcing tools which leverage real-time technology. Strategic sourcing processes have never been easier. Contact us today to schedule a demo and discuss your requirements with our sourcing consultants.