Although strategic sourcing can be defined in a number of ways, a good start to understanding it is to first identify what it is not. Strategic sourcing is not the purchase of materials and services on an as-needed, day-to-day, hand-tomouth basis. This is largely transactional buying. Instead, strategic buying is the opposite: A systematic process that directs purchasing and supply managers to plan, manage, and develop the supply base in line with the organization’s strategic objectives—and in a manner, that optimizes the contribution of the supply base to the organization.


Strategic sourcing is a process driven by an identified goal or need and consists of:

  • Evaluating current and potential sourcing opportunities and relationships.
  • Assessing their value and relevance according to long-term goals and overall business and supply management objectives.
  • Formulating and applying actions plans and processes for critical commodities or supply networks.


Ultimately, strategic sourcing is knowing what kind of relationship to develop based on market knowledge, the commodity, and the long-term business
objectives. It is a sourcing process whereby organizations choose suppliers in a deliberate, calculated fashion. Selection decisions are determined based on factors such as a supplier’s new product development capabilities and capacity to share information electronically, or the ability for a supplier’s component to differentiate the final product. With strategic sourcing, organizations analyze and decide on suppliers based on the strategic impact of potential suppliers and commodities on the organization or supply chain, instead of simply awarding supply contracts to suppliers with a narrow focus on lowest bid.

 

Key to strategic sourcing is gaining an understanding regarding the supplier landscape in order to determine the following:

  • Who are the suppliers?
  • How are they related?
  • What is the customer buying?
  • Who are they buying from?
  • What are the risks?
  • How much is spent with each supplier?
  • What is the quality of goods purchased?
Ariba Discovery: Buyer Value for New Supplier Discovery
        • Achieve incremental product and service cost savings of 15% on average by making purchasing events more competitive
        • Reduce the process cost of seller identification and qualification of up to 50-75%
        • Access to rich seller information to make better, informed decisions
        • Save time (up to 90%) with an easy 3-step discovery process

         

        Secrets to Using the Supplier Profile Questionnaire

        What the Profile Questionnaire is:

        • The profile questionnaire is a document that contains sections and questions. Ariba provides one master copy of the profile questionnaire. You can also add your own questions to the default questionnaire to collect information that can help you choose appropriate suppliers.
        • The profile questionnaire is a type of document that is contained in a knowledge project.
        • The profile questionnaire is a draft document until you publish it. Once published, the updated profile questionnaire is available to organizations the next time they edit their profiles.
          • Ariba recommends that you publish updates to the profile questionnaire during a period of low activity for your site, such as a weeknight or a weekend, to allow the system to update supplier records with new profile questionnaire data in a regulated way. If you publish the profile questionnaire during a time of high activity and a user creates a supplier search that includes profile questionnaire answers and returns a large number of results, the system must update all of the supplier records for those results at once, which can impact the performance of your site.
        • The profile questionnaire is a great way to obtain additional information from Suppliers. Suppliers might request to provide information on their capabilities and commodities, or you might encounter a supplier whose data you need. Suppliers can update their profile, or you can provide a URL that allows suppliers to directly access the supplier profile.

         

        • Configurable profile with predefined out- of-the-box fields7-19-2011 3-59-50 PM.png
        • Ability to search on extended supplier profile fields
        • Supplier Self-Registration
        • Supplier Organizational Hierarchy
        • Ability to score profile elements
        • Supplier Discovery Postings
        • Questions from the SPQ can be added to events, and the supplier’s answers from the SPQ will be pre-populated, and if they modify the answer, the SPQ is updated.

         

        7-19-2011 4-01-02 PM.png

        Next: Sourcing - Art or Science? pt.2

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        Beverly Dunn is a Customer Success Manager with Ariba. All customers are invited to join the private Customer Success group on Ariba Exchange, where you can access the Customer Success     Spotlights, Lunch 'n Learn Webinar calendar and replays, and the    Ariba   Knowledge Nuggets.