Strategic Sourcing (PowerPoint PPT)

Strategic Sourcing (also known as Procurement Strategy or Sourcing Strategy) allows an organization to realize significant savings by evaluating its Procurement costs across a number of spend categories. This concept of Strategic Sourcing was popularized through work with a variety of blue chip companies by a number of consulting firms in the late 1980s and early to mid 1990s. (For a more detailed explanation, refer to the Wikipedia excerpt at the end of the description.)

If your organization is pursuing low-hanging opportunities for Cost Management, Strategic Sourcing is one of the quickest and highest impact initiatives to take on. This is why Strategic Sourcing has become the norm for Procurement departments in large, sophisticated organizations, such as Fortune 500 companies.

However, for Strategic Sourcing to be effective, we must follow a proven, methodical framework to go through the Strategic Sourcing process by correctly assessing the cost savings opportunities, developing a robust Sourcing Strategy, and successfully executing the Implementation Plan. This PowerPoint (PPT) presentation details a 4-phase framework to Strategic Sourcing, outlining time frames, activities, and outputs. It is the same framework developed and used by global management consulting firms.

The approach detailed in this presentation follows these 4 phases:

1. Assessment Snapshot – In the initial Assessment Snapshot phase, the organization's spend is assessed to determine the potential savings benefit.

2. Spend Analysis – This phase requires significant data analysis, requiring the development of a Spend Analysis Tool (typically in MS Access).

3. Category Sourcing – There are 2 types of Products that can be sourced – a Commodity Product or a Specialty Product. In this deck, we lay out the process for both types of products.

4. Implementation – Lastly, Implementation is the most important phase, where true savings are realized. There are multiple parallel streams within the Implementation phase.

Each phase is explained in detail, including a breakdown of sub-processes and activities. As alluded to, this framework can be applied to both Commodity and Specialty spend categories.

As this is a fully editable PowerPoint presentation, you can also adapt the slides as templates for your own Sourcing Strategy presentation. The 4-phase approach can used as a Sourcing Strategy template (PPT).

Wikipedia defines Strategic Sourcing as:

... the process of developing channels of supply at the lowest total cost, not just the lowest purchase price. It expands upon traditional organizational purchasing activities to embrace all activities within the Procurement cycle, from specification to receipt, payment for goods and services to sourcing production lines where the labor market would increase firms' ROI. Strategic Sourcing processes aim for continuous improvement and re-evaluation of the purchasing activities of an organization.