Tactical Sourcing — Everything You Need to Know

Tactical sourcing is a way to work on procurement problems swiftly. Crucial questions come into mind, ‘How can I resolve my issue with our supplier?’  

‘How can I do this process without wasting any effort?’ Here comes Tactical sourcing. It’s a process involving proactivity without exerting too much effort. 

It saves time and resources while optimizing immediate operations. This article discusses how tactical sourcing can make things better.

We’ll discuss it, from its importance to its advantages and disadvantages. We’ll also differentiate tactical and strategic sourcing. 

To add to the discussion, I’ll provide my insight. We’ll talk about how technology can improve tactical sourcing. Grab your pen and paper, and let’s proceed!

What is Tactical Sourcing?

Why is Tactical Sourcing Important?

Tactical sourcing defines its importance in procurement through its operational contribution.  Think of this way as an engine that keeps the company machine moving. 

It’s a behind-the-scenes company procurement process that we don’t usually see. It ensures immediate addressing of procurement needs.

It’s a prompt and swift approach to prevent disruptions. Even when supply chain issues remain uncertain, tactical sourcing goes about it. 

Only a well-prepared procurement team can fix a complex scenario involving its supply chain. That’s how tactical sourcing makes of a procurement team!

It enables them to go about the company’s business smoothly. Moreover, it helps them negotiate contracts with suppliers. 

In a way, It is a substantial position benefiting from procurement skills. These skills make the process more efficient.

It happens by contributing to an efficient process. To add to this fascinating benefit, it also helps manage procurement timelines.

You can say that it’s a way to maintain a competitive edge in market environments. However, even when applying tactical sourcing, the process is rigorous. 

Always take into consideration how the company prepares for such a situation. Market prices may fluctuate due to uncertainties and numerous factors. It’s a challenge that the company must face efficiently. 

Again, Tactical sourcing makes everything ‘tactical. It starts from a solid supplier relationship to cost-saving strategies.

On top of that, it manages timelines and helps companies adapt. Be it a sudden market change or a more complex uncertainty.

To that effect, being optimal and efficient is more than welcome. It’s a leading way to adapt to the dynamic procurement landscape. 

Tactical Sourcing and The Kraljic Matrix

Tactical sourcing uses various activities to install a solid purchasing strategy.  However, these options are ‘too broad’ for company purposes. This sourcing type aims to achieve concrete actions in short time frames. 

There are numerous options if you’d ask for a perfect fit. These choices range from grouping sections to value levers. Even these levers have their segments! 

It starts with volume bundling and goes to price evaluation. It also includes supply base expansion and relationship enhancement. Also, let’s not forget about process and product optimization. 

That’s a lot to cover if you’d ask. But don’t worry, we have a solution.

Enter the Kraljic Matrix. It’s a four-segment mapping tool that aims to narrow down activities. 

It helps classify portfolios and have a quick market analysis. It’s your partner for checking out all the vital information for a fast and dependable response. 

After all these evaluations, you’re ready to step up on market positioning. With all these tools in your arsenal, you can plan your action.

So, a question arises, ‘How can I put it in tandem with tactical sourcing?’ Check below how the sourcing process works with the Kraljic matrix:

1. Leverage Items

In the ‘leverage items’ quadrant, think of tactical sourcing as your go-to-negotiator. 

A high-impact but low-complex item may need some negotiation tactics. It can help achieve volume discounts. 

Check your tactical sourcing approach, and be careful but rigorous. It’s always safe to take extra measures to secure favorable contract terms. 

Be cautious in consolidating demands. Immediately address possible concerns before things go south.

Test the situation, and when the opportunity arises, grab the volume bundle!

2. Strategic Items

In the ‘strategic items’ quadrant, tactical sourcing goes risk management. It involves supplier base expansion to combat dependency. 

Having a few crucial suppliers is fine, but having more options won’t hurt. 

Optimize your supplier approach and communicate the company’s needs. Also, add your partners when planning how to approach design. 

This process can help the company meet specific requirements more. Doing so can help achieve operational efficiency.

High risk and high complexity mean going hands-on with the tactics!

3. Bottleneck Items

In the ‘bottleneck items’ quadrant, tactical sourcing reminds you of choosing purchases. It tells you, ‘Be careful with complex purchases!’ 

The process involves streamlining purchase processes to overcome this bottleneck. Communicate with your go-to suppliers to ensure a smooth and consistent supply flow! 

Additionally, provide the necessary information on bottlenecks to avoid misspending. Bottleneck items aren’t generally a problem. 

However, failure to implement robust management may mean bad news to the company.  Always proceed with caution and use tactical sourcing to avoid it.

4. Non-Critical Items

In the ‘non-critical items’ quadrant, tactical sourcing is the reminder of savings. It tells you that ‘you don’t need to buy that item just because it’s on sale.’ 

Use tactics responsibly to categorize your immediate needs and their impact and value. Understand how the cost-effectiveness of the item can affect the company. 

This evaluation is crucial even if there’s low impact. It can help manage operation flow smoothly.

The Kraljic matrix is the tactical sourcing support tandem. The matrix helps the team understand a procurement scenario. It can use handy tactical sourcing.

Always consider options before finalizing your actions. The process can save time, resources, and effort.

Advantages and Disadvantages of Tactical Sourcing

Knowing when to put tactical sourcing into good use is vital for companies. It reduces unnecessary effort and maximizes benefits. Always emphasize the ‘tactical’ when sourcing. 

It’s imperative to plan the activities for specific scenarios. It doesn’t have to be an ‘every’ scenario. Tactical sourcing is there to address these situations most optimally. 

But, there’s always a drawback to situations that need specific solutions. 

Below, we’ll discuss three advantages and disadvantages of Tactic sourcing.  In this way, you can grasp the idea and use it in a scenario that needs it:

Difference between Tactical and Strategic Sourcing

One way to look at tactical and strategic sourcing is by looking at how it represents the two sides of the same coin. It’s in one place, but it can’t meet. 

Tactical sourcing tackles short-term procurement operations. These operations aim to complete current company requirements. It involves efficient procurement task management. 

These tasks include contract negotiation and emerging supplier relationships. Additionally, it includes efficient logistics for better goods and services delivery. 

It’s the one-stop shop for procurement professionals who must resolve immediate activities. 

On the other hand, strategic sourcing feels more comprehensive. It focuses on the company’s long-term perspective. It involves encompassing procurement strategies. 

These are the strategies that include the overall company objectives. It also includes long-term cost opportunities and solidifying partnerships. 

It’s the strategy you use to ensure innovation and market advantage. Even when the two approaches are different, they synergize for a cohesive operation. It provides the company with the ground to navigate market complexities. 

It tackles present forward people in the company’s present. Consequently, it ensures they have something to look forward to in the company’s future. 

To recap, here’s a table to simplify the difference between these two sourcing approaches:

My Insight on Technology in Tactical Sourcing

Tools and technology are the go-to solutions for boosting tactical sourcing processes. In my time as a procurement manager, I noticed three fascinating benefits.

Conclusion

Tactical sourcing is crucial in handling immediate procurement concerns. It’s an intelligent assistant that guides you on what to do.  It’s the battle plan you need to combat sudden uncertainties. 

This article has discussed how tactical sourcing supports immediate partnerships and secure transactions. We also learned about how it works in tandem with its partner, the Kraljic matrix. 

Additionally, we expanded its advantages and disadvantages. You must always check both sides of the process before proceeding. We also compared the difference between strategic and tactical sourcing. These processes may be the two sides of the same coin. 

But remember, they don’t meet. Each process has its purpose in your company’s procurement. Pursuing procurement excellence requires you to analyze the situation.  Then, apply the necessary action.

Use tactical sourcing to address immediate concerns and prevent problems from coming about!