The recent global health crisis taught us that strategic sourcing is critical for organizations looking to build a resilient supply chain to navigate uncertainty and economic downturns.
Economists have been predicting an impending 2023 recession, making now a critical time to work closely with your sourcing team and maximize supplier performances to maintain business continuity.
Let’s discuss how this can help you navigate the uncertainties as we move toward sustainability in an economic downturn.
- As decision makers allocating a company’s resources, strategic sourcing leaders and finance professionals must collaborate to meet resource allocation requests, critical savings targets and growth projections.
- Demonstrating trust and credibility with stakeholders is critical for sourcing leaders looking to elevate the role of strategic sourcing in the organization.
- Benefits of elevating your strategic sourcing include improved business outcomes, increased savings and efficiency, complete visibility and supplier risk mitigation.
What Is Strategic Sourcing
Strategic sourcing is a procurement process in supply chain management that integrates data collection, market research, spend analysis, supplier negotiations and contracts to optimize an organization's supply base.
Source: Ejet Sourcing
Collaboration Between Finance and Strategic Sourcing
As decision makers allocating a company’s resources, strategic sourcing leaders and finance professionals must work together to meet resource allocation requests, critical savings targets and growth projections. Unfortunately, strategic sourcing leaders often get left out of the discussion.
As organizations grapple with new or persisting challenges, they must not underestimate the value their sourcing teams bring to the procurement of resources. Sourcing teams can offer valuable insights into enterprise-wide spending through collaboration with their finance counterpart.
Elevating Strategic Sourcing Teams
Sourcing leaders who want to elevate the role of strategic sourcing in the organization must demonstrate trust and credibility with executives and other stakeholders. Strategic sourcing and procurement teams often face the antiquated belief that they are difficult to work with because of their perceived tendency to slow down processes.
Savvy sourcing leaders position their team to be seen as an asset to the organization, leaving them free to embark on more strategic initiatives such as:
- Leveraging supplier relationships
- Decreasing or eliminating rogue spending
- Meeting ESG goals
- Project prioritization
Sourcing leaders can also work to make their collaborations as convenient as possible within the organization to boost their influence within the company. One way to do this is by conducting weekly meetings where department managers can present ideas or ask questions. When you open these lines of communication, you will offer more value through improved insights.
Strategic Sourcing and the Role of Digital Technologies
Managing strategic sourcing duties often relies on manual processes via spreadsheets and emails. Even some large business entities still use legacy systems in conjunction with these clunky manual processes to execute these responsibilities.
The possible recession will intensify an organization's need for digital solutions in strategic sourcing. Organizations that do not implement digital processes in strategic sourcing will incur financial losses.
These technologies deliver deeper insights for strategic sourcing teams, improve supplier relationships and support efforts to leverage increased cost savings for the business.
Companies must recognize the importance of investing in tech for strategic sourcing. Equipping sourcing teams with digitized processes will enable them to adapt to market conditions and maintain business continuity.
Benefits of Strategic Sourcing
Strategic sourcing teams can use intuitive solutions to better demonstrate their direct impact on the organization's bottom line. Additionally, they can gain increased visibility within the C-suite by delivering the following benefits:
Improves Supplier Relationships
Sourcing teams can bring deep market insights and expertise in negotiations with suppliers and manage the organization's needs and supplier agreements. With a bird's eye view of relationships with suppliers, strategic sourcing teams can further these connections.
Increases Savings and Efficiency
Each dollar saved through strategic sourcing impacts the bottom line directly. Note that savings aren’t just about driving hard bargains. They also come from increased efficiencies through proactive engagements with suppliers and stakeholders.
Automating sourcing initiatives boosts team efficiency by freeing up their time from manual tasks such as financial reporting and data migration, allowing them to focus on more important tasks.
Automation also contributes to operating efficiency by delivering insights that enable sourcing teams to negotiate timely deliveries while retaining inventory at a supplier’s facilities. They can also use these insights to negotiate favorable payment terms with suppliers.
Delivers Complete Visibility
Strategic sourcing solutions provide a centralized platform for planning, initiating and completing sourcing measures while monitoring suppliers' performances. Maintaining this data in a single repository enables you to track sourcing from start to finish.
Mitigates Supplier Risk
Strategic sourcing leaders can contribute enterprise-wide value by delivering real-time insights on supplier risks. You will also be able to ensure compliance with regional and local laws such as data protections policies, the General Data Protection Regulation (GDPR) and even human rights legislation.
You no longer have to worry about supplier overlaps or misplaced contracts. Instead, you get a seamless and coordinated process that’s completely visible to all parties, increasing cost savings and ensuring compliance with relevant regulators.
Boosts Product Speed to Market
Organizations with strategic sourcing and procurement leaders have a deeper understanding of the supply, enabling them to find innovative ways to tackle supply chain challenges. This is especially essential in fast-growing companies or organizations facing uncertainty because they must move quickly to manage supply chain needs.
Empower Strategic Sourcing Teams With Vena
Organizations that invest in the best technology and strategic planning solutions to empower their strategic sourcing leaders reap the rewards of increased compliance with their suppliers, improved alignment among departments and deeper insights into resource allocation for upcoming projects.
As companies continue to navigate uncertainty in the supply chain and concerns with the recession, they continue to turn to Vena for insights to help them make strategic business decisions. Maintain business continuity with Vena's most accessible strategic planning software.
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