Strategic Sourcing Implementation
Andrew Gager, CPIM
Purpose
Life Cycle Engineering (LCE) firmly believes that every client whether a single site or multiple sites, has the ability to leverage their spending to strategically position themselves for competiveness, cash flow improvements and bottom line profitability.
This paper outlines the major steps taken to successfully implement a strategic sourcing operation. Once this approach is understood, interpreted and committed to, an organization will be better prepared for the challenges and ultimate rewards of strategic sourcing.
Why Implement Strategic Sourcing Processes
Estimates show that mid-sized US companies miss the opportunity for supplier savings in excess of $134 billion due to inadequate sourcing competencies (1). This much money left on the table could mean the difference between profitability and bankruptcy. There are two views on Strategic Sourcing. On the operational side we have benefits such as cost improvements, cycle time reductions, improved inventory turns, transaction reductions, higher service levels, inventory reductions, improved quality initiatives, etc.
On the strategic side we have increased profitability, competitive positioning, improved reaction time to market conditions, utilization of supplier expertise, outsourcing possibilities, true partnering with suppliers, etc. World-class companies that have successfully implemented Strategic Sourcing recognize that a strong commitment internally, partnered with an innovative supplier base, are a valuable part of an organization that focuses on reducing waste, non-value added activities and costs.
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