Strategic Sourcing
It is the Purchasing Department's responsibility to develop strategic sourcing initiatives that leverage Seminole State's annual buying power and cost-containment opportunities without imposing restrictions on manufacturers or products required by faculty and staff.
Benefits of Strategic Sourcing
- Accounts for total cost
Price isn't the only thing that matters. Quality, service, delivery and other aspects affecting the total cost or value of a product are also considered.
- Is analytically rigorous
Strategic sourcing managers do extensive research to determine the optimum type and quantity needed of a particular product or service, market-place pricing and service benchmarks for products and services, and the competitive advantages offered by all potential suppliers (not just the incumbent supplier).
- Incorporates broad-based input
The decision to award a supplier relationship is not made by the purchasing organization alone. When needed, a team of key stakeholders is assembled to select the most beneficial supplier(s).
The Strategic Sourcing Process
- Develop purchasing profiles and priorities.
The strategic sourcing team helps the Purchasing Department gather as much information as possible about what the College should purchase as well as how and when the desired products or services should be bought. This process may involve internal interviews and in-house surveys.
- Identify strategic sourcing products.
Next, the Purchasing Department and strategic sourcing team develop specifications for the products to be purchased. These specifications can be very detailed, identifying exactly how a product will be used and what features are most and least important.
- Solicit bids and negotiate with suppliers.
After user needs are outlined and understood, the Purchasing Department and strategic sourcing team identify potential suppliers. A detailed competitive solicitation is usually issued, detailing the information needed from potential suppliers.
Supplier Strategies for Success
- Develop competitive, value-based pricing.
Many suppliers incorrectly assume that pricing is the most important component of a formal proposal. While pricing does play a role in the supplier selection process, it is not the only factor that is considered. The Purchasing Department and strategic sourcing team are also interested in the overall services provided to the College.
- Be innovative.
The Purchasing Department and strategic sourcing team are not just looking for new products and services that deliver a competitive advantage; they are also interested in finding new ways to do business. How quickly can the supplier adapt to changing customer requirements? Does the supplier use the latest technology? Does the supplier pass along the benefits of its cost-reduction initiatives? These are all things that are considered in the decision-making process.
- Emphasize support and service.
Suppliers who provide strong customer service and support have a competitive advantage in the strategic sourcing process. Considerations include how the supplier responds to complaints and whether the supplier guarantees levels of performance such as on-time delivery and damage-free shipments. These factors, along with price and value, are extremely important.
- Invest in technology.
Many large businesses reduce supply-chain costs with electronic commerce and better use of technology. Cost-efficiency measures are noticed and appreciated by the College.
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