How to improve your sourcing process for a leaner team

Before we get stuck into the best steps for improving your strategic sourcing process, first let’s begin with a quick introduction and breakdown of strategic sourcing itself. So, what is it?

Strategic sourcing is, in a nutshell, a process that impacts all facets of a business. This involves internal collaboration with suppliers, as well as analysis of spend, and risk management for suppliers. Breaking all of these processes down allows you to easily identify any risks in your supply chain and ultimately mitigate them before anything can go wrong.

Using excellent methodology, critical analysis, and a keen eye for potential pitfalls, one can streamline the strategic sourcing process for success.

Seven Critical Steps for Improving the Strategic Sourcing Process

1 – Identify Key Spend Areas

The first step to improving your strategic sourcing process is to identify the spending areas. That is the key to identifying certain areas that could easily produce cost reductions—or process improvements at the very least.

By prioritising your various spend areas (based on the company objectives), and collecting data / analysing said data, you can begin categorising spend and better understanding where (and why) certain spending is taking place.

2 – Perform an Analysis of Market Supply

Next, you’ll want to perform market research to identify relevant suppliers that can be of great benefit to your business. This process includes:

  • Demand analysis
  • Supplier selections
  • Category risk analysis

You’ll want to explore beyond existing customers and consolidate your supplier data. Look at the different categories and compare spending with supplier revenue.

Following that, you can conduct supplier interviews and start partnering with those who can help take your business to the next level. Just be certain to carry out risk assessment and determine as to whether switching suppliers is definitely the right move, or if there are too many risks with doing so.

3 – Scrutinise Your Current Sourcing Process

Research products used by your suppliers and identify / understand why they are using said products, when cheaper alternatives might be available. If you can cut costs without compromising on quality, then everybody wins.

You can carry out a similar process against your current suppliers, compared with sources from overseas. Even if you don’t plan to switch to an overseas supplier, it can be beneficial to have a global view (and you may even end up finding a superior resource).

4 – Design a Clever Sourcing Strategy

Now that your team has a clearer idea of supply market and spend areas, you can begin putting together a strategy to determine various ways to minimise both costs and risks. Of course, before this you must understand the capabilities of your current suppliers. This will give you valuable insight and help you to establish realistic milestones and timeframes for accomplishing future objectives. That, and by adopting strategies like this, you can renegotiate a better deal with your suppliers.

5 – Refine Supply Selection Process

Once you have evaluated your suppliers, you can better define your requirements and send detailed questions to them in order to get a better overview of the processes, products, and overall costs. Both current suppliers and potential suppliers can come back to you with key information and you can weigh them as necessary in order to qualify and improve your sourcing process even further.

6 – Request Quotations

As you acquire new shortlisted companies that are qualified with the potential to meet your needs, you can challenge existing suppliers with a revised quotation request. If they know that you have been conducting market research and looking at what their competition can bring to the table, it may inspire them to come back to you with a highly competitive offer (and look to improving their processes while they’re at it).

Be honest and transparent throughout this process. It’s business.

7 – Maintain Quality Supplier Relationships

This is arguably one of the most undervalued aspects of the strategic sourcing process. You need to maintain your relationships well. By establishing an effective supplier relationship (and a program that allows you to manage all relationships with care and consideration), you will better be able to implement new ideas and processes, and develop continuous improvements along the way.

Keeping your supplier happy is important. After all, they play a fundamental role in the operation of your business on a day to day. In addition to that, better working relationships often make it easier to negotiate more competitive rates as you progress.


And that about sums it up! There is much that you can do to streamline your strategic sourcing process, and following these seven steps will get you off to an excellent start. It’s a lengthy and complicated process that requires much care and consideration, but by collecting and scrutinising crucial data and then turning it into actionable information, you can work wonders for your supply chain.

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