Strategic Sourcing In Procurement Management

By Author: Abinash Panda
Total Articles: 9
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Purchasing requires getting the best product at the best price, on time and in the right place. Procurement Management is a process which involves managing the ordering, receipt, review and approval of items from suppliers.
Using a Procurement Management Process, one can ensure that the goods received meet the organizations need. One of the critical aspects of procurement management is to specify how the supplier relationships will be managed, to ensure a high level of service.
With an increasing trend of outsourcing, procuring goods and services from external suppliers can be a critical path for many projects. It's therefore crucial that you manage your supplier’s performance carefully, to ensure that they produce deliverables which meet your expectations.
The business environment today is experiencing volatility like never before. Volatility in the supply chain has always been a challenge procurement departments have accounted for. With a rapidly expanding global supply base the degree of this volatility has increased and so has the ...
... scale of disruption that this volatile ecosystem creates.
The source of volatility varies from those arising out of political instability in the countries around the world to natural calamities which are having a major impact on the sourcing activities of organization. Globalization and dependence of organizations on the world economy has also added to the sourcing challenges faced by the organization.
With demand on the decline and rising commodity prices, procurement needs to evolve from its transactional role to making strategic decisions to ensure continuous supply, by hedging on the risks arising out of the macroeconomic conditions.
Today procurement’s role is not to set up sourcing events and source the product from the low cost supplier or for that matter conduct a reverse auction and award the bid to the lowest cost supplier.
Times today demand procurement to look out at suppliers globally and evaluate the suppliers on a number of parameters which could have an impact on the functioning of the organization. Strategic sourcing ensures that an organization,
• Reduces risk of supply disruption by reducing reliance on a single supplier: Sourcing from more than one supplier by awarding contracts to different suppliers based on the merit rather than awarding the lowest bid.

• Explores supplier innovation : Invite best possible options that the supplier has to offer rather than going for a pre decided contracting terms.

• Consider the impact on total cost of ownership before awarding of the contract: Consider the impact of purchases made over the years in terms of the maintenance cost, part replacement etc.

• Increases visibility into sourcing projects: Ensure accountability by assigning responsibilities of the various stages in the sourcing process to respective individuals. Ensures availability of resources at every stage thus ensuring successful sourcing.
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Zycus Inc. is a global provider of Spend Management solutions (Spend Analysis, Strategic Sourcing, Contract Management, Supplier Performance Management and Supplier Information Management) that are world renowned for delivering an accelerated return on investment through superior user adoption to create Maximized Savings. With more than 200 global proven implementations, Zycus’ solutions have emerged as the global favorite. To find out more, go to www.zycus.com