Top 5 Benefits of Strategic Sourcing
Strategic sourcing is an approach to product procurement that continuously evaluates and re-assesses a company’s purchasing behavior in order to increase that company’s profitability. Most large businesses have a buying strategy and know what they can spend, but many do not have an understanding of their data or a comprehensive strategic approach to sourcing.
Benefits of strategic sourcing go far beyond just a small cost savings. Your company can gain other non-financial advantages through the use of a strategic sourcing partner, such as Provident Spend Management. Listed below are the top 5 benefits of strategic sourcing.
The most important thing that should be declared from the start is that no one has better knowledge of your company than you. There is no outside company that could come into your business and knows more than you do about your own products and operations. This is the beauty of a strategic sourcing partnership.
A strategic sourcing partnership relies on this very concept. Provident Spend Management works as an extension of your purchasing team. This collaboration allows us to understand the scope of your business and then use that knowledge to propel your business forward by saving you money and time. We call this relationship a partnership because strategic sourcing is not a one-time event. It is a process which can be analyzed and improved upon continuously. With open communication and consistent analysis, additional value is added to every activity.
A strategic sourcing partner can give your company the opportunity to see things in a different light.. Many times, it is easy to get so engrossed by your own business that it is hard to be objective about important decisions. Hiring a strategic sourcing company can open up new possibilities with your product plan that you weren’t aware of before then.
Because of this objectivity, the strategic sourcing partner is able to explore creative supply strategies and even challenge suppliers. While it may seem too aggressive and self-serving for a business to challenge a supplier, it is essential to the job of the strategic sourcing company. The definition of strategic sourcing refers to a fact-based approach, in which a company relies on data and real-world analytics to customize an individual plan.
Your job, no doubt, includes about 100 moving pieces. Sourcing products is not your business — it just helps your business. Have you ever found yourself saying, “If only I had all the time in the world to dedicate to this one thing…” Well, a strategic sourcing partner like Provident does have all day to concentrate on one thing, and it is 100% focused on spend management. That is Provident’s business, so it is only natural that Provident would be able to deliver superior results.
Without a dedicated strategic sourcing partner, some aspects of product sourcing may slip through the cracks. For example, everyone knows to implement some sort of risk management when choosing a supplier, but you may not know to look for more than just financial risks. Because of its specialized focus, your strategic sourcing partner will identify and mitigate so much more, including supply risks, quality risks, and support risks.
While your company might have a stellar reputation on its own, a strategic sourcing company has worked tirelessly to build a strong relationship and reputation with the suppliers you need. According to Michigan State University’s College of Business, “Developing solid relationships can help sourcing professionals become better at meeting cost, speed-to-market and quality goals, while allowing suppliers to more efficiently tailor and deliver materials to precise purchaser specifications.”
When your procurement partner develops relationships with suppliers, it is easy for them to compile summaries and spreadsheets based off of previous transactions done with those suppliers. This allows them to present you with relevant and comprehensive data when sourcing products for your business.
The most popular and most convincing reason for most businesses to partner with a strategic sourcing company is to save money. The average percentage savings with Provident is in double digits.
How are you saving that money? You acquire a reduced cost per unit through supply chain savings, price improvements, and reduced lifecycle costs. Operating efficiency costs must also be considered, and procurement time is greatly reduced through strategic sourcing. Strategic sourcing partners have the technology, tools, and resources needed to create customized product procurement plans.
In addition, Provident Spend Management does not charge for an analysis of your current spend, so there is no monetary risk for inquiring.
Are you ready to get a free analysis for your company? Contact us today!