Current Sourcing – The Ultimate Guide for 2022
For the professional procurement manager, current sourcing may sound like a complete mystery. The truth is that it’s not as complicated as it seems. All it takes is just an understanding of how sourcing actually works.
For this article, we are going to talk more about current sourcing. We’ll check out its definition and learn more about how we can apply this type of sourcing to our procurement process.
Once you’re done reading this article, you should have an idea of how current sourcing works.
Current Sourcing – What is It?
To be precise, current sourcing is basically strategic sourcing at its core. And because it’s also the same with strategic sourcing, its functions are basically one and the same too.
One of the best things that strategic sourcing always offers to procurement teams all over the globe is that the process never really stops. Strategic sourcing should be the continued process of sourcing (or searching) the best suppliers for your procurement projects. Even if you already have a steady supplier for your current needs, you will never know when your current supplier may suddenly start having issues.
For that reason alone, the future of procurement may also hang in the balance when it comes to strategic sourcing. With today’s economic crunch, it’s still surprising how the procurement industry is able to hold on, despite the challenges. With strategic sourcing and the help of procurement programs that augment procurement processes for different companies, it is now easy to maintain strategic sourcing for your company.
The 8 Steps of Current Sourcing
Each step will help the sourcing manager in making sure that the strategic sourcing process is done efficiently. These steps are divided into the following:
- Analyzing product categories that are used by the business. Spending patterns, processes, and the departments involved are checked thoroughly.
- Developing a sourcing strategy that is based on the business goals of the company.
- Checking the request for template and criteria proposals.
- Selecting suppliers and negotiating with the said suppliers.
- Integrating suppliers into existing processes.
- Onboarding new vendors that were selected.
- Outsourcing providers if needed.
- Performance metrics tracking and optimizing the sourcing strategy if needed.
The sourcing strategy manager must make sure that the steps involved are followed, analyzed, and tracked. This will help the company make adjustments the next time a different strategic sourcing process is needed for a different procurement process.
Sourcing involves much more than just simply picking a supplier or a contractor for each requirement in isolation. It also involves continuing relationships, both with preferred sources that are giving the company the necessary goods and services, and with potential sources that may have been passed over for the present, but these are still in the running.
For its proper performance, sourcing requires actual supply market research. Supply market research identifies the set of actual and potential sources that constitute the supply side of a market while investigating their capabilities and examining market trends and long-term supply prospects.
The following are critical success factors in strategic sourcing. These factors are based on three key areas; people, processes, and technology:
- Know the suppliers and the market.
- Use technology to support the execution of strategies, such as digitalization and advanced analytics.
- Obtain senior-level support
- Establish a cross-functional team (CFT)
- Enforce compliance
- Engage stakeholders
- Adopt a company-wide supply chain focus
- Encourage supplier innovation
- Carry out continuous improvement
- Set up adequate reporting metrics to show success.
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Current Sourcing Trends for 2022
For the strategic sourcing manager, the process of strategic sourcing promotes a lot of benefits not just for the procurement department, but for the whole company as well.
Because strategic sourcing is all about businesses outsourcing their procurement process to professionals or having their in-house procurement department work on it, the process should work on creating the best strategic sourcing model.
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In any case, here are the key benefits of using strategic sourcing for your procurement process:
1. Increased cost savings
The biggest benefit for most companies that use the talents of an exception strategic sourcing manager. Choosing suppliers that provide the highest value at the right pricing will give a company the ability to continuously achieve higher cost savings.
2. Ideal suppliers are optimized
One of the many tasks of the strategic sourcing manager is to find and analyze suppliers. This is key to improving the procurement process of your organization. By analyzing each supplier’s profile and core capabilities, the company is now well-equipped to match their company’s objectives with the right suppliers.
3. Long-term relationships built with suppliers
A company that established its strategic sourcing process is one that already has good long-term relationships with its suppliers. Because the company can invest more with suppliers that are chosen specifically because of strategic sourcing, the suppliers, in turn, are more than happy to do business with the company that is paying them good money for their products and/or services.
4. Guidelines are improved
Again, strategic sourcing is all about following the same set of methods and processes over and over again until the right source of vendors is selected. The continuous process, in turn, will give the company great insight into how each process works at the end. Since more companies nowadays are using strategic sourcing software to better automate the entire process, this gives the company more opportunities for improving its guidelines.
Frequently asked questions
What is current sourcing?
Current or strategic sourcing is the continuous process of searching for the best suppliers for high-quality supplies/materials
Why is current sourcing important?
Current sourcing is important because companies rely on sourcing for locating the supplies they need for the development of their products/services.
Who is in charge of current sourcing?
Companies usually employ a strategic sourcing manager for the job.
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