Strategic procurement incorporates actions aimed at reducing the supplier base, negotiations, communication and maintaining longterm relationships with suppliers ryals and rogers, 2006. Pdf the role of strategic sourcing on global supply. To access the menus on this page please perform the following steps. Heres the fourth installment, you can download the full pdf at the end. However, the single most important aspect of a procurement strategy is to have one. For example, in april 20, dod was assessing the need for additional resources to support strategic. In addition, the individual will be responsible for all phases of sourcing that require the. Procurement accounts for nearly two thirds of all undp deliveryand the demand for procurement services is growing. Strategic sourcing institute for supply management.
Furthermore, issues like economic and political volatility, technological disruption. Lets take a look at the difference between the two so you can better understand which term should be used and when. Strategic procurement incorporates actions aimed at reducing the supplier base, negotiations, communication. The bestpractice templates for projects, sourcing events, contracts, and more are based on geps global procurement expertise. In the past 3 years, procurement volumes have grown significantly in the health, elections, sustainable energy and crisisresponse sectors. Strategic sourcing reflects the integration of procurement or sourcing strategy with corporate strategy porter 1998.
How to strategic sourcing chapter 4 procurement and. The next steps are purchasing and procurement management which are established after sourcing and strategic sourcing to execute upon the contract and to. Modern day procurement managers manage procurement and sourcing function both at strategic and operational levels. The ultimate guide to strategic sourcing purchasecontrol. A procurement management plan must provide procurement strategies that will allow the business to maximize its benefits in the processes of procurement. Strategic sourcing decisions are, for example, makeor buy decisions and supplier selection. Strategic sourcing is a method of managing procurement processes for an organization in which the procedures, methods, and sources are constantly reevaluated to optimize value to the organization by allowing them to buy more effectively and efficiently. A strategic approach involves understanding the importance of the procurement to the agency in achieving its outcomes, sourcing suppliers and managing relationships to successfully deliver against public policy objectives and business needs, whilst delivering. Major changes are currently taking place within purchasing functions of manufacturing firms. Strategic purchasing and supply management it might also provide a presentation of a coming. It can have a profound impact on a companys financials and can strongly. The strategic procurement planning approach described in this note follows three main steps. Chapter 11 it procurement planning and strategic sourcing.
Strategic purchasing young procurement professionals. Strategic sourcing is the dynamic delivery of internal and external, business or itoriented resources and services to ensure. Ofpp strategic sourcing strategic sourcing ofpp a structured and collaborative process of analyzing an organizations spend and using the information to make business decisions about acquiring commodities and services more efficiently and effectively 4. Strategic procurement management is the process of planning, implementing, evaluating, and controlling strategic and operating purchasing decisions for directing all activities of the purchasing function. Procurement planning is the process by which all personnel responsible for significant aspects of a project have adopted specific roles and responsibilities and are integrated in a comprehensive. Strategic sourcing emerges as an important factor to support and integrate the suppliers into the supply chain intelligently this chapter aims to provide understanding of how strategic sourcing. Pdf strategic procurement management lecture notes by. Information is gathered and used to enable an organization to leverage its consolidated purchasing power to source the best possible values in the marketplace. Strategy sourcing is an approach to procurement whereby the business needs of the organization are matched with the supplier market. Traditionally, sourcing was considered to be the identification of new or potential suppliers.
Strategic sourcing decision making is the scope of this master dissertation. Procurement function is considered to be a strategic initiative and seen to be adding value to entire business process. However, strategic sourcing can go well beyond cutting costs. Mastering procurement a structured approach to strategic.
Corporate procurement and strategic sourcing groups are playing a broader and more strategic role than ever in helping organizations accomplish this task. The integration of procurement and corporate strategy is reflective of the. The 7 steps of a strategic procurement process trade ready. Before you can procure materials from your suppliers, you must first find and vet those suppliers. Strategy sourcing is an approach to procurement whereby the business. Strategic sourcing is a well established and proven method for managing largescale, medium. Sole source pdf this form must accompany purchase requisitions for the sole source procurement of equipment, construction, supplies or services when the. Gep smart sourcing can be used as a standalone application or as part of the gep smart unified procurement platform, alongside spend analysis, contract management, category management. Purchasing is shifting its focus from daily procurement activities to long term, valueadding purchasing and supply. The cips body of knowledge is eloquent on the definition of purchasingbut was scant on the definition of procurement. Strategic sourcing involves the establishment or modification of acquisition vehicles to better address federal government procurement needs and or more effectively leverage spend, market position, market knowledge e. Strategic procurement management is the process of planning, implementing, evaluating, and controlling strategic and operating purchasing decisions for directing all activities of the purchasing function toward opportunities consistent with the. Evolving from its roots working with the manufacturing industry to more cost effectively purchase raw materials, strategic sourcing is now charged with finding cost effi. Whether we call it purchasing, procurement, supply management, sourcing or buying it is.
Information is gathered and used to enable an organization to leverage its consolidated purchasing. Strategic sourcing is a method of managing procurement processes for an organization in which the procedures, methods, and sources are constantly reevaluated to optimize value to the organization by. The scope of strategic sourcing extends beyond supplier price negotiation and takes. This involves data gathering around the operating environment, supply markets, and key risks. Strategic sourcing throughout the product lifecycle. Cips defines reactive sourcing as being the procurement approach where no proactive sourcing strategies have been put in place and so the purchasing and. Delta bid have produced a 10 chapter strategic sourcing guide. The process is compared to a new iso standard with guidance on strategic sourcing and development of fm agreements. Mppm chapter 3 strategic sourcing and category management. Each week, pasa will be bringing you a new chapter. As businesses today continue to harness the power of globalization to expand performance, the role of effectively sourcing goods and services from suppliers has become inevitable.
Heres the fourth installment, you can download the full pdf at the end chapter 4. Developing and implementing a strategic sourcing strategy cips has formulated positions on strategic sourcing as this is a key activity for purchasing and supply management professionals. A model of best practices for a sourcing process semantic scholar. What is strategic sourcing and why is it important. Sourcing strategy providers evaluation and selection. Without a strategic approach, no overall view of the sourcing costs and efficiency is taken and the profits of the business are effected. Strategic sourcing solutions optimize supply chain i ivalua. It can have a profound impact on a companys financials and can strongly influence the purchasing and procurement processes.
As our profession has evolved from the purchasing agent to supply chain mentality, strategic sourcing culminates the transformation as a collaborative process. Strategic sourcing is the dynamic delivery of internal and external, business or itoriented resources and services to ensure that business objectives are met. The core of strategic sourcing, it comprises the allocation of resources to define and implement strategies to conduct category negotiations and business relations. Sourcing, purchasing, suppliers, procurement, best practice, model. Ofpp strategic sourcing strategic sourcing ofpp a structured and collaborative process of analyzing an organizations spend and using the information to make business decisions about acquiring. Strategic sourcing is an approach to supply chain management that formalizes the way information is gathered and used so that an organization can leverage its consolidated purchasing power to find the. Purchasing is shifting its focus from daily procurement activities to long term, valueadding purchasing and supply chain initiatives. Strategic sourcing manager job description position summary sourcing manager to be responsible for the companys end to end sourcing of products and services essential for our operations. For purposes of this paper, strategic sourcing will be defined as the. The best strategic sourcing decision may be to not make a purchase at all russel, 2009.
Through procurement planning and strategic execution, companies can be more aware of the factors and elements that are necessary to be considered before buying materials and or items or. General motors initiated systematic strategic sourcing in the. Additionally, purchasing executive performance is often. Additionally, procurement is transforming into a more strategic function that is aligned to organizational goals and objectives. It is a systematic procurement process and one component of supply chain.
Unlike a transactional based purchasing approach that. We proudly present the resulting ebook of this years project strategic purchasing. Agencies have not fully adopted a strategic sourcing approach but some have actions under way. Strategic sourcing methodology chapters covered all of the preparation ne. Public procurement practice strategic procurement planning. As a strategic function of the organization, procurement must be engaged in the. Surprisingly,elsewhere in the world,the purchasing word remains prevalent. Strategic sourcing is organized since some type of methodology or process is needed. Oct 06, 2016 delta bid have produced a 10 chapter strategic sourcing guide. So, far from being just another strategic sourcing tool, gep smart is where sourcing forms a critical link in the chain from savings opportunities to realized savings.
A strategic approach involves understanding the importance of the procurement to the agency in achieving its outcomes, sourcing suppliers and managing relationships to successfully deliver against. Profile of the procurement managers has changed and expectations from these managers are different. Developing and implementing a strategic sourcing strategy. What it is what it is not focused on the total cost of ownership tco incorporating. Strategic acquisition center sac office of procurement, acquisition and logistics opal skip to page content. Strategic acquisition center sac office of procurement. In the past 3 years, procurement volumes have grown significantly in the health. The integration of procurement and corporate strategy is reflective of the transformation of purchasing to supply management. It is much more than simply centralizing procurement. Strategic procurement planning should begin with a mission statement. The paper investigates a strategic sourcing and procurement process in a large public organisation in denmark based onparticipating in internal meetings, a workshop, document studies and interviews. Unlike a transactional based purchasing approach that responds to a need by initiating a solicitation and executing a contract, a strategic sourcing approach.
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