What Are Your Strategic Sourcing Goals?

Ask anyone in procurement "What is the goal of strategic sourcing?" and their reply is likely to include the phrase "to save money."  And that is commonly the 


#1 goal of strategic sourcing.  
But it's problematic when procurement departments treat it as the only goal. 
For sourcing to be truly strategic, it must accomplish
more than just saving money.  It must bring value to the
organization in many other ways.  Here are four goals
commonly missing from strategic sourcing initiatives:

Goal #2: To reduce risk.  The international news
constantly reminds us that natural disasters, political
upheavals, and other events make doing business
exclusively in certain parts of the world a risky
approach.  Strategic sourcing should enable you to
sustain continuity of supply in the face of unexpected
disruption to the operations of one or more suppliers.

Goal #3: To improve supplier performance.  Reducing the
unit price you pay on purchase orders is nice, but it is
meaningless if your organization has to deal with
frequent late deliveries, an unacceptable number of
quality defects, and poor supplier service.  Strategic
sourcing is only truly successful when you achieve both
cost reduction and an improvement in supplier performance.

Goal #4: To bring in innovations from the supply base.
In today's competitive business environment,
organizations need a constant flow of innovative ideas in
order to keep their competitors from stealing their
market share.  Suppliers can be a great source of
innovative ideas and a good strategic sourcing process
will ensure that the flow of such ideas is facilitated.

Goal #5: To support the organization's social
responsibility goals.  Today's organizations support
diversity, environmental responsibility, and other
philanthropic goals.  Decisions made as part of strategic
sourcing should consciously help move the organization
towards those goals and not away from them.

So, as you can see, saving money is not THE goal of
strategic sourcing.  It is one of several important goals.


By Charles Dominick, SPSM, SPSM2