Strategic Sourcing Process: Step-by-Step Breakdown

Perfect strategic sourcing plan into procurement processes can lead you to minimize the cost, help in selecting the potential supplier, and help the business in the long run. Then, where is the lack? In the process. 

In this blog post, you will understand the strategic sourcing process and step-by-step approach from beginning to end. This will ultimately help and guide you to build a strong backbone for your business in the long term. 

Overview of the Strategic Sourcing Process 

The Strategic sourcing process involves the advantage of both the supplier and buyer. This process is about identifying and analyzing the goods or services or suppliers that support business operations in the long term.  

Suppliers bring fresh ideas and innovations that help your business stay ahead. And in return, they expect a long-term and strong supplier relationship with you. 

Who leverages this process? 

Strategic sourcing is a team effort where procurement professionals work together within an organized 7 step process. Each member plays a vital role in the final decision-making of purchasing or supply chain.  

The end goal of strategic sourcing is to choose the right supplier or cost of ownership, improve quality standards, cost savings and establish long-term relationships with suppliers. 

Step-by-Step Strategic Sourcing Process  

We are moving forward to the steps of fulfilling the Strategic sourcing process, where you will start with:  

Defining the category

This is the first stage to find your needs and define them in categories like is its raw material, IT equipment, and office supplies to get clarity on what and where to buy. Businesses then analyze spend data in each category, reviewing purchase frequency, order sizes, total spending, and seasonal trends. This gives an idea to businesses to spend at the right place. 

Supply market evaluation

In this stage, businesses search for suppliers who can fulfill their specific needs. This could involve researching new vendors, reviewing existing ones, or using supplier databases. Factors like pricing, quality, delivery speed, reliability, and even location are carefully reviewed. The objective is to shortlist a variety of capable suppliers, giving the company flexibility and a better chance of choosing the right procurement strategies for long-term success. 

Build a strategic sourcing strategy

This step is about deciding how and where to find source while keeping risks low and value high. Start by setting clear goals and outlining what your ideal supplier must deliver. Review both current vendors and explore new ones. Build a set of criteria that fits your business needs and involve key team members from different departments to make a well-rounded and informed choice. 

Choose the Strategic Sourcing process 

After researching suppliers, the next step is to issue RFIs, RFPs, or RFQs to gather formal responses. These documents help vendors understand their specific needs, such as pricing, delivery expectations, service quality, and performance goals.  

Clearly outlining your requirements ensures suppliers can submit accurate proposals. The collected responses serve as the foundation for comparing offers and creating a shortlist of suppliers best aligned with your business objectives. 

Vendor selection and negotiation 

Once suppliers are shortlisted, it’s time to negotiate, not just on price, but also on quality, delivery, and support. Companies often talk to several suppliers at once to get the best deal. Different departments may get involved in picking the right partner. The aim is to find reliable suppliers who fit both your current needs and long-term business goals. 

Integration and Execution 

Strategic sourcing works best when there is regular communication with your key suppliers. Once you have picked the right vendors, keep them in the loop, especially during the implementation stage. If the product or service is complex, stay closely connected. Share updates, involve them in meetings, and make sure they understand any changes. This helps build a strong working relationship and ensures everything runs smoothly. 

Benchmarking 

This step is often ignored, but it’s very important. You should keep checking how your supplier is performing. First, see how things are working now, then keep an eye on the results from time to time. If something goes wrong, you can quickly find the issue and ask the current supplier to fix it before it causes bigger problems. 

Conclusion  

At Beyond Intranet, we help businesses modernize their sourcing strategies by implementing intelligent Source-to-Pay solutions. From spend analysis to supplier performance tracking, we empower procurement teams to make faster, smarter decisions through advanced analytics and process automation. 

Our end-to-end support ensures a seamless sourcing-to-procurement experience, enhancing visibility, reducing potential risk, and strengthening supplier relationships. Partner with Beyond Intranet to unlock smarter sourcing. Let’s talk.