The four steps of strategic sourcing

Strategic sourcing is a procurement process that connects data collection, spend analysis, market research, negotiation, and contracting. It stops short of the actual purchase of and payment for goods and services.

Strategic sourcing can be customized to meet a customer’s specific needs, but its main goal is to leverage a single, integrated system to enhance profitability.

Strategic sourcing best practices include:

🔖Digitizing documents

🔖Participating in a digital business network

🔖Automating workflows

The process can be broken down into four steps:

➡️Data collection and spend analysis:

Spend analysis concentrates supplier data into one source, letting organizations know exactly what’s being spent where and presenting the opportunity to streamline vendors.

➡️Supplier discovery and RFx: 

Sourcing becomes a strategic advantage when organizations can access supplier data through a digital business network, allowing them to request RFPs and have suppliers compete for their business.

➡️Negotiations and contracting: 

Automated tools can speed workflows, simplify the digital signature process, and create an electronic repository of contracts where organizations can set renewal alerts.

➡️Implementation and optimization: 

When sourcing is automated and digitized, organizations can move faster, build in feedback loops for continual optimization, and constantly evaluate suppliers to make sure they're getting the best sourcing agreements possible.