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Sourcing Strategy


In today’s globally competitive business environment, purchasing is becoming a critical participant in the firm’s strategic planning function. It is a basic process common to all organizations which accounts for approximate 40-50% of the entire budget. It may be machinery, inventories, raw materials, or service. Therefore, it has a tremendous impact on the bottom line of any business. Several questions arise while taking purchasing decision like shall we 
• Go for global or local? 
• Opt for Single or multiple sourcing? 
• Buy on the contract or on a spot basis

According to Peter Kraljic, we can categorize our product into four categories
a) Strategic items-high profit impact, high supply risk
b) Leverage items-high profit impact, low supply risk
c) Bottleneck items-low profit impact, high supply risk
d) Non-critical items-low profit impact, low supply risk

Based on the types we have to take the purchasing approach
 

Strategic Sourcing Purchasing and Supplier Management Paper activities-
a) Identify sourcing categories
b) Identify sourcing constraints 
c) Total Cost Analysis
d) Standardization
e) Purchasing process review
f)  Supply market study

 

a) Request for Information (RFI) 

b) Request for Proposal (RFP)
c) Request for Quotation (RFQ)
d) Utilize vendor evaluation tools
e) Price and cost analysis
f) Total Cost of Ownership (TCO)
g) Negotiation
h) Supplier's continuous evaluation 
i) Early Supplier Involvement (ESI) and Co-Design

a) Order emission
b) Accounting

 

                                                                                                                  Purchasing Process



 

Price Delivery Product quality Security
The capability of using IT systems After-sales services Financial position Product improvement
Production team Lead time Flexibility Relationship capability Trust
Workforce qualification Reputation Strategy consistency

                                                                                                     Key Criteria we use to select a supplier

BE PART OF BIGGIES, TAKE FRANCHISEE

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