Strategic Sourcing by a Project Manager is the Most Effective Way

POSTED ON September 16, 2021

As we have discussed in our previous blogs, strategic sourcing is the perfect and innovative way to reduce costs, achieve a faster time to market and improve the quality of the final product.

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 labour market would increase firms’ ROI”

Research shows that 65 per cent of procurement executives are open to innovation and are ready to embrace new technology or processes to support the organization’s strategy. Moreover, it has been shown that 88 per cent of organizations consider strategic sourcing as critical or major. This shows the strategic role that sourcing has assumed in helping the organization’s goals.

Today, businesses and sourcing managers focus much beyond cost savings. They look at improving all processes including supplier acquisition, supplier performance management and resource management at each step of the sourcing process to reduce the risk and derive maximum benefits from the sourcing project.

There are various reasons that have necessitated or made strategic sourcing more relevant today than ever. It has also changed the way sourcing projects are managed. Here are some reasons why strategic sourcing is important and why you need a project manager for effective strategic sourcing.

  • Today’s business environment is more competitive and volatile than ever before. The sourcing methods that work earlier, no longer work. Today, businesses are faced with challenges such as fluctuating currency rates, intense competition in supplier market, ever-changing customer preferences and the need for constant product innovation makes it necessary to adopt strategic sourcing. You also need a professional project sourcing manager to cope up with the changing environment and overcome challenges.
  • Supply chains are now spread across continents. It has become very difficult for businesses to survive in an isolated domestic market, especially when other businesses are leveraging global supply chains in low-cost countries. So, it is very much possible that you are running sourcing projects in multiple locations or in countries where you have no local presence. In this case, you need a project manager on the ground to run your sourcing project in a foreign location.
  • These days, lowering costs in not the only objective of procurement. Most businesses are relying new and innovative products to drive growth. For this, you need to strategize your sourcing in a way that you are able to leverage the new product development capabilities of another country. It is not always economical to do it within your country or to have the resources it takes to design, develop and manufacture the product in-house. Businesses quite often have to rely on other countries particularly China for new product development.
  • Over the years, the scale of operation has expanded to a degree that businesses have to look outwards for procuring raw materials or parts. Moreover, it is not always possible to expand the scale of operations as the demand increases. Businesses then look at outsourcing to other countries to leverage their economies of scale and lower labour and material costs.

In a nutshell, strategic sourcing helps businesses create a competitive advantage through their supply chains. Businesses all over the world are banking on strategic sourcing to achieve growth and success. To make the most from strategic sourcing, you need the services of a competent and experienced project manager to run your project successfully.

If you too need a professional project manager to take care of your China sourcing project, get in touch with our team to discuss your requirements.