Strategic Sourcing in Procurement

​Strategic sourcing in procurement

By Марина Левитская

​In this lesson you will learn what strategic sourcing in procurement is and how it helps companies to achieve their goals.

Strategic sourcing is a procurement strategy which can help companies to reduce costs, improve processes and increase productivity.

​Strategic sourcing is a systematic process of analyzing expenditures, internal and external influences, and finding out what kind of supplier relationships are necessary to help achieve the company’s goals.

​Before the company decides to purchase a product or service, strategic sourcing is used to consider the total cost of a product or action, not just the price alone.

​In the past, many purchasing managers neglected the fact that low purchase cost does not necessarily mean low total cost.
In a strategic sourcing process other costs are examined as well e.g. the cost of purchasing, transport, support, maintenance, and disposal.

​In a strategic sourcing process other costs are examined as well e.g. the cost of purchasing, transport, support, maintenance, and disposal.

​Speak about strategic sourcing

1. What is strategic sourcing?

2. Why is it important to consider the total cost of a product or service in strategic sourcing?

3. What costs are examined in a strategic sourcing process besides the purchase cost?