WhatisStrategicSourcing?

Definition:Asystematicandfactbasedapproachforoptimizinganorganization's supplybaseandimprovingtheoverallvalueproposition. Whatitis

FocusedontheTotalCostofOwnership(TCO)incorporating customerneeds,organizationalgoals,andmarketconditions G tti th Getting theb best tproduct/service d t/ i at tth theb best tvalue l Drivenbyarigorousandcollaborativeapproach Addressesallleversforsavings Decisionsbasedonfactbasedanalysisandmarket intelligence Acontinuousprocess

WhatitisNOT
FocusedONLYoncost G tti th Getting thecheapest h tproduct/service d t/ i Adhocactivitiesinvolvingonlypurchasing Focusedonbeatingupsuppliers Decisionsbasedonopinion opinion,unjustifiedpreference preference, orcomplacency Aonetimeprojectordecision

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ScopeofStrategicSourcing?
Thescopeofstrategicsourcingextendsbeyondsupplierpricenegotiationandtakes intoaccountthetotalcostofownership
Amountpaidtosuppliers
Purchase Price

Demand Drivers Specifications ocu e e t Procurement Practices Internal Processes Inventory Practices

Total acquisitioncost

InternalPolicies &Procedures

Operational Practices

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AdvantagesofStrategicSourcing?
Create C t partnerships with suppliers Bestpractice sharing Costsavings

Access tonew suppliers

Strategic Sourcing

Increase quality

Improve operational efficiency ffi i Standardize pricing

Spec

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ObjectivesofStrategicSourcing?
Objectives Obj i of fstrategic i sourcing i surround dthe h reduction d i of fcostwhile hil maintaining i i i orimprovingquality
Improve p thevaluetop price relationship(i.e.achievecost reductionswhilemaintainingor improvingquality/service) Understand U d t dcategory t b buying i & managementprocesstoidentify improvementopportunities

Objectives
Examinesupplierrelationships acrosstheentireorganization Develop&implementmultiyear contractswithstandardizedterms andconditionsacrossthe organization

Leverageentireorganizationsspend

Sharebestpracticesacrossthe organization

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