The strategic sourcing process is a complex process in which detailed research is carried out about the product and the vendor. The main goal is to find out the best supplier for your product.
Strategic sourcing mitigates the potential risks and reduces the overall cost. There are seven steps in strategic sourcing. Let’s have a look.
Step One: Cost Analysis
The first step is all about the merchandise. Your team will research the current prices, competitors, and specifications of the products. You also need to identify your client base and the volume spent on the goods.
Carry out maximum research in this step to analyze your expenditure.
Step Two: Study the Supply Market
Research the supply market in detail to analyze the cost of your product including the raw material, labor, and shipping. Look for potential vendors with better price quotations. Study the risks and opportunities associated with the sourcing of your product.
If you are a beginner, you can take consultation with different suppliers for a better analysis of the supply market.
Step Three: Make the Sourcing Process Strategy
In this step, your procurement team will develop a product sourcing strategy on their own before hiring a supplier. Next, keeping your business objectives in view, start looking for a potential supplier. If you are already working with the supplier then you can renegotiate with them as well.
Keep your requirements to a minimum said that you can achieve your goals within your resources.
Step Four: Select the Sourcing Strategy
Now you are open for bidding. You can use the RFP (request for proposal) method for bidding. In this process, a document is prepared in which the requirements, pricing, and terms and conditions are mentioned. You can also share your selection criteria. The interested vendors will submit their proposals.
Step Five: Selecting the Best Supplier
Now you have a list of suppliers that are interested in working for you. You can shortlist the suppliers that meet your requirements and arrange interview sessions with them. You can have a discussion round with the suppliers and ask for more details. You can also negotiate with the vendors for deals.
After discussion, you can select the best supplier and sign the contract, developing a beneficial relationship for both parties.
Step Six: Plan Execution
Interpret all the details of the vendor and keep on updating them throughout the implementation of the project. Ensure flexibility, cooperation, and transparency during the execution.
Step Seven: Follow-Ups
In the last step, self-analyze your performance. Ask yourself if you have achieved the expected results. If you will keep on monitoring your performance, you will soon be able to point out the areas where you are lacking.
You can make use of procurement software to track your data and keep a record of expenditures, and savings. So, in the end, you can judge the performance of your suppliers. Generate feedback and keep improving your system.
The market is changing daily. Thus, you also need to keep on evolving and updating the sourcing process according to market trends.
Our team, at Like Sourcing, helps businesses to find Chinese suppliers. We find the right suppliers, negotiate, and build contracts with suppliers for our valuable customers. The whole process from sourcing the product until it is shipped to the warehouse is completed under our supervision.
Our extra services offer detailed inspection of the product, extra labor, innovative logos and labels, and attractive lifestyle images for your product.