Strategic sourcing is the ongoing process of finding the best suppliers and using these supplier relationships to maximize value for an organization. This process involves efforts on the part of buyers to carefully evaluate and form mutually beneficial and enduring supplier relationships.
More companies today are realizing that their success does not solely depend on what happens in-house; it also relies on having strong ties with the outside forces that make it possible to continue the production process.
A Request for Proposal (RFP), is the primary document that is sent to suppliers that invites them to submit a proposal to provide goods or services. Internally, an RFP can also be referred to as a sourcing project, a document, or an associated event (competitive bidding).
In a nutshell, strategic sourcing refers to efforts on the part of buyers to carefully evaluate and to form lasting relationships with suppliers. These relationships are generally mutually beneficial and also can involve a dramatic change in attitude. With strategic sourcing, businesses view their vendors as partners instead of simply commodity providers. While this difference in attitude may not seem significant, it has a lasting and positive impact on the success of both the supplier and the buyer.
Many companies who have adopted e-procurement techniques or who are moving in that direction are also realizing the benefits of centralized purchasing data. Essentially, centralized purchasing data is just what it sounds like: maintaining a single warehouse to hold all information related to the buying of business-related supplies.
A growing trend in business today has been foreign sourcing. Generally, this sourcing involves allowing a foreign company to handle elements of a company's production and/or service process. Most companies simply view foreign sourcing as a way to save money because these countries charge considerably less
In the last few years, the one thing most businesses were not worried about was having a scarcity of suppliers. For the past few years, the reverse was actually true. The supply of vendors was greater than the demand for their services and, as a result, buyers found the perfect time to begin using high-tech tools to assist in their purchasing decisions.
While many companies have attempted to move toward a more centralized purchasing model, one area of purchasing has remained relatively unchanged until now. That area is business travel. Most companies do not incorporate their business traveling planning into their other procurement strategies and, therefore,
Saving money is always at the forefront of every business decision but when it comes to purchasing and sourcing, there are a number ways to cut costs that are often neglected or which do not use to their full advantage. Companies who fail to see these possibilities could be standing in the way of significant savings that would dramatically improve their bottom line.
One of the biggest trends in business today is global sourcing. In 2001, the United States alone sourced over $1.3 trillion in goods to low-cost suppliers around the globe. Of course, the biggest reason for global sourcing is the cost savings; which can be significant. Most companies report an average savings of up to 30% when they begin global sourcing (also known as offshoring).
While outsourcing to other countries has been an increasingly popular way of reducing costs for businesses, some companies fail to make that leap successfully simply because they don't know how to deal with individuals from other countries. As Westerners, it can be difficult to realize that business is not carried out the same way around the world,