Question

In your initial post, suppose that you are a purchasing manager with a small or mid-sized company. You have been asked to transition the company from traditional/transactional purchasing to strategic sourcing and supplier relationship management.

How would you begin this process? Once implemented, what competitive advantage does strategic sourcing give your organization over its competitors?

Answer 1

There are different steps in the transition process. The first step is to identify the quality parameters, specifications and criteria for the raw materials, other inputs as well the quantities required over a period of time. The establishment of the requirements should take place with interaction with the concerned departments or functions. In the second step, the requirements are quoted through the tenders in popular dailies or listings that can be accessed by the suppliers and vendors. In the next step, the suppliers will quote their price and lead time and the location of the suppliers with the quality details. The next step will be to select the supplier that can offer cost effective deals with quality input material as well as fulfilling the other criteria of the organization. The organization would like to opt for selecting at least 2 suppliers for the materials so that consistency in supply is maintained.

It gives different competitive advantages such as stable prices of the raw materials with consistent supply that helps the organization in their pricing strategy. The strategic tie ups with the suppliers, also bring a strong and flexible supply chain that can face different challenges of the dynamic business environment. It acts as an advantage over the competitors.