A supply chain management that paves the way how information is gathered , so that organization can use this information to find the best possible inputs in the marketplace is known as strategic sourcing. Kim who happens be the author of business and industrial marketing defines strategic sourcing as management’s mindset to reach the both short and long term goals of the organization simultaneously. Furthermore in simple terms it can be defined as the competitive advantage created by the management of an organization to increase the performance of the organization.
Purchasing vs strategic sourcing
One of the distinctive features of strategic sourcing from purchasing is that sourcing focuses on sustaining and converging the bond between the supplier and the buyer. The main goal of strategic sourcing is to exploit, leverage, compliment and integrate of the different partners in the supply chain. Since strategic sourcing depends on incorporating capabilities and dimensions of suppliers, thus it provides help in the decision making process. Moreover strategic sourcing provides best results and accurate information when compared to traditional purchasing.
|Cost||Low cost||Has the best possible value and makes up to the total cost of ownership|
|Quality / Quantity||Mass discount is given since high volumes are generated||Best quality for lowest possible cost|
|Skills||Requires proficiency, analytical and negotiation skills||Requires cross functional ,collaborating and self-negotiating skills based on compromises and mutual respect|
|Location||Supplier base||Global network|
|Procedure||Deciding what to buy and from whom||Comparing different services to make the best quality offer|
|Relationship||acquaintanceship||Sustainable and intense|
|Adjustments||Make approaches for failure in improvement||Approaches for failure prevention|