Supply Chain Management Consulting
Strategic Sourcing and Supply Management
Overview
Strategic Sourcing and Supply Management is about selecting the right suppliers and integrating them with the client’s business processes to improve their customer’s experience at the lowest total cost. Many of today’s supply chains consist of a complex network of global suppliers. Key operations are commonly outsourced to multiple suppliers. Developing the proper sourcing strategies, enhancing supplier capabilities, and managing the supplier relationships can help a company reduce its cost of operations and create a competitive advantage.
Practical applications include:
• Make vs. buy; strategic outsourcing
• Supplier innovation and development
• Leverage total company or partnership commodity spend
• Diversity of supply networks
• Building a strategic supply management organization
• Global sourcing expansion
• Strategic change in business model and supply strategy
Business Problem
Are you experiencing these business challenges? Do these questions sound familiar?
Common Business Challenges
• Failure to leverage volume and economies of scale and scope with fewer suppliers
• Increasing cost pressure and competitive threats
• Difficult to collect and analyze key data compounded by poor quality of data
• Lack of automated, integrated process; failure to utilize technology solutions
• Little internal collaboration with other business functions; procurement not included in the sourcing decision process until supplier negotiations
• Strained relationships and lack of trust with suppliers
• Lack of innovation and new-value creation from supply base
• Sourcing mission and goals are not aligned to the strategic objectives of the company
• Competitive outsourcing solutions vs. internal operations
Key Questions for Consideration
• How does your supply strategy link to the company business strategy?
• How are we driving innovation and new-value creation with our preferred outsourcing providers? Are our mutual interest and incentives aligned? Shared risks?
• How do suppliers bring forward unsolicited proposals for innovation, new value-creating solutions that help your companies top and bottom line? Do we encourage this behavior?
• How are we actively driving down costs, shortening supplier lead time, and introducing new technologies to drive continuous improvement?
• Do we have a diverse supply network that offers wide-ranging capabilities and helps prevent risk?
• Do our sourcing policies encourage collaboration with suppliers?
• Do our performance metrics set appropriate expectations with suppliers and act as indicators for management decisions?
• Do we perform rigorous data analysis to guide and support supplier relationship management decisions?
Service Solution
Supply Chain Acuity’s Strategic Sourcing and Supply Management service helps our clients successfully leverage their supply base and key outsourcing providers to drive supply chain value. In a strategic sourcing engagement, we help clients develop a sourcing strategy, conduct market analysis, create and administer an RFI or RFP, develop a negotiation strategy, develop a service level agreement, and initiate implementation. When helping our clients manage a strategic outsource provider or contract manufacturer, we implement best practices for joint process improvement, internal and external collaboration, and the right financial and operational incentives to align mutual interests and shared risks and rewards.
Delivered Benefits and Desired Outcomes
• Reduced overall category spend and total landed cost per raw material and components
• Internal vendor management capabilities to effectively manage supplier capabilities
• Vested outsourcing relationship with prime outsourcing providers to align mutual interests and incentives
• Streamline routine procurement processes
• Leverage technology to improve processes
• Embedded sourcing process in the organization – sourcing/procurement representatives have a seat at the table to influence key business decisions early in the decision process
• Fact-based decisions supported by rigorous data analysis and information accessibility
• Define, monitor and measure key supplier performance metrics
• Contingency planning; proactive risk prevention and mitigation strategies ready to be employed if necessary