Strategic Sourcing -Kpi
Strategic Sourcing
Strategic sourcing is an institutional procurement process that continuously improves and re-evaluates the purchasing activities of a company. In a production environment, it is often considered one component of supply chain management The following are the steps involved in the Strategic Sourcing :
1. Assessment of a company's current spend (what is bought where?)
2. Assessment of the supply market (who offers what?)
3. Total cost analyses (how much does it cost to provide those goods or services?)
4. Identification of suitable suppliers
5. Development of a sourcing strategy (where to buy what considering demand and supply situation, while minimizing risk and costs)
6. Negotiation with suppliers (products, service levels, prices, geographical coverage, etc.)
7. Implementation of new supply structure
8. Track results and restart assessment (continuous cycle)
Challenges in Strategic sourcing :
Sl No
Challenge
Case
Strategy
BI opportunity
1
Constant Pressure to reduce the procurement cost
There are many factors which effect the spend of the organization ,like cheaper vendors in china and India, Economic recession , fuel cost , raw material cost etc. The CPO of the organization needs to manage the spend by taking these factors into consideration.
The cost reduction can be possible by sourcing better, to achieve this the CPO of the Organization needs to identify the opportunities in the organizations , which is possible only if he can have a clear picture of the spend.
1) By providing the CPO of the organization with a dashboard view which gives a clear picture of the various spend in the organization , the CPO will be in a better position to take decisions which can result in
2
Large volume of Transactional DATA
The Multi National organizations which have implemented ERP solutions generate huge amount of transactional data. These ERP systems are very efficient in managing the transactional data
Strategic sourcing is an institutional procurement process that continuously improves and re-evaluates the purchasing activities of a company. In a production environment, it is often considered one component of supply chain management The following are the steps involved in the Strategic Sourcing :
1. Assessment of a company's current spend (what is bought where?)
2. Assessment of the supply market (who offers what?)
3. Total cost analyses (how much does it cost to provide those goods or services?)
4. Identification of suitable suppliers
5. Development of a sourcing strategy (where to buy what considering demand and supply situation, while minimizing risk and costs)
6. Negotiation with suppliers (products, service levels, prices, geographical coverage, etc.)
7. Implementation of new supply structure
8. Track results and restart assessment (continuous cycle)
Challenges in Strategic sourcing :
Sl No
Challenge
Case
Strategy
BI opportunity
1
Constant Pressure to reduce the procurement cost
There are many factors which effect the spend of the organization ,like cheaper vendors in china and India, Economic recession , fuel cost , raw material cost etc. The CPO of the organization needs to manage the spend by taking these factors into consideration.
The cost reduction can be possible by sourcing better, to achieve this the CPO of the Organization needs to identify the opportunities in the organizations , which is possible only if he can have a clear picture of the spend.
1) By providing the CPO of the organization with a dashboard view which gives a clear picture of the various spend in the organization , the CPO will be in a better position to take decisions which can result in
2
Large volume of Transactional DATA
The Multi National organizations which have implemented ERP solutions generate huge amount of transactional data. These ERP systems are very efficient in managing the transactional data