Strategic Sourcing from China Guildline

POSTED ON August 26, 2021

In today’s hugely competitive global markets, everyone strives to reduce their sourcing costs while still maintaining quality by Strategic Sourcing from China. Effective sourcing of goods from suppliers is more important today than it was ever before. For this reason, strategic sourcing has become central to every organization’s procurement policy.

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.”

The strategic sourcing process basically involves identifying and analyzing the business needs of an organization and then matching them with the right suppliers after a thorough analysis of the market. The idea is to understand all the costs involved in sourcing products, analyze your supply chain management system and figure out ways to reduce your sourcing costs.

Strategic sourcing is an organized effort towards identifying, assessing, and choosing the supplier that offers the lowest costs. The focus is not on finding the lowest price but on achieving the lowest costs through process optimization. 

Strategic sourcing is different from procurement in the sense that it takes into account the organization’s goals and objectives, risk mitigation, the total cost of ownership and the fact that decision-making is based on market intelligence.

Strategic sourcing is a proactive approach that helps businesses build long-term relationships with their suppliers. The ultimate goal is to achieve competitive advantage through aligning your business goals with the right kind of suppliers.

By helping you build long-term relationships with the suppliers, strategic sourcing ensures better cooperation and inspires trust. This motivates the supplier to offer the best services.

The strategic sourcing process

1.        Identifying the right suppliers

Effective sourcing specialists always strive to find the best quality products at the lowest cost from the most reliable suppliers. However, when identifying suppliers, the focus is not just on the lowest prices but also on logistical considerations that can make one supplier better than the supplier offering the lowest price. It is also important to choose a supplier with a good track record and reputation. It helps maintain effective supply chains under all circumstances.

2.        Cultivate positive working relationships

Strategic sourcing is much more than just identifying the best suppliers. It is equally important to cultivate long-term relationships with the suppliers. The organization must strive to achieve a symbiotic relationship with the suppliers wherein both parties can benefit from the relationship. A positive working relationship can help improve speed-to-market, and meet cost and quality goals.

3.        Continuously improve sourcing skills

As the markets continually evolve and go through changes, organizations need to keep upgrading their strategic sourcing skills. To plan, organize, and implement a sound sourcing strategy for the organization, the sourcing managers must become more proficient in strategic sourcing. They should work towards improving the efficiency and efficacy of their supply chain and reduce the overall costs.

4.        Track Results

This step is critical to the success of your strategic sourcing from China strategy. So long as you don’t benchmark and compare your results, you won’t be able to decide whether you have been able to achieve better efficiency and cost-effectiveness or not. You must keep track of results and strive to improve your strategic sourcing process further.

As we said earlier, the marketplace is constantly evolving so benchmarking, comparing and then tracking results is extremely important to understand how well you are performing.

Strategic sourcing from China is the order of the day. For this reason, many businesses across the world rely on China for not only sourcing regular products but also for new product development. The kind of efficiencies you can achieve by outsourcing your manufacturing to China is incredible.

If you too are considering outsourcing your manufacturing to Chinese suppliers, you need on-the-ground help to identify the right supplier and then manage the supply chain for you. Get in touch with our sourcing team now to discuss your project. We are a professionally managed sourcing company headed by an experienced sourcing manager-cum-certified project manager. So, you can stay assured that your project is in good hands.