Additionally, purchasing executive performance is often. Pdf the role of strategic sourcing on global supply chain. Strategic sourcing is the dynamic delivery of internal and external, business or itoriented resources and services to ensure. Procurement function is considered to be a strategic initiative and seen to be adding value to entire business process. The cips body of knowledge is eloquent on the definition of purchasingbut was scant on the definition of procurement. Major changes are currently taking place within purchasing functions of manufacturing firms.
Developing and implementing a strategic sourcing strategy. As our profession has evolved from the purchasing agent to supply chain mentality, strategic sourcing culminates the transformation as a collaborative process. The integration of procurement and corporate strategy is reflective of the. Strategic sourcing is a method of managing procurement processes for an organization in which the procedures, methods, and sources are constantly reevaluated to optimize value to the organization by. The best strategic sourcing decision may be to not make a purchase at all russel, 2009. Purchasing is shifting its focus from daily procurement activities to long term, valueadding purchasing and supply. Strategic acquisition center sac office of procurement, acquisition and logistics opal skip to page content. So, far from being just another strategic sourcing tool, gep smart is where sourcing forms a critical link in the chain from savings opportunities to realized savings. Strategic sourcing manager job description position summary sourcing manager to be responsible for the companys end to end sourcing of products and services essential for our operations. However, strategic sourcing can go well beyond cutting costs. Public procurement practice strategic procurement planning.
Without a strategic approach, no overall view of the sourcing costs and efficiency is taken and the profits of the business are effected. Heres the fourth installment, you can download the full pdf at the end chapter 4. Pdf the role of strategic sourcing on global supply. Lets take a look at the difference between the two so you can better understand which term should be used and when. Strategic purchasing and supply management it might also provide a presentation of a coming. Chapter 11 it procurement planning and strategic sourcing. Strategy sourcing is an approach to procurement whereby the business needs of the organization are matched with the supplier market. Strategic procurement planning should begin with a mission statement. Strategic sourcing is organized since some type of methodology or process is needed. To access the menus on this page please perform the following steps. Unlike a transactional based purchasing approach that. Procurement planning is the process by which all personnel responsible for significant aspects of a project have adopted specific roles and responsibilities and are integrated in a comprehensive. However, the single most important aspect of a procurement strategy is to have one. The process is compared to a new iso standard with guidance on strategic sourcing and development of fm agreements.
Strategic sourcing methodology chapters covered all of the preparation ne. Gep smart sourcing can be used as a standalone application or as part of the gep smart unified procurement platform, alongside spend analysis, contract management, category management. Sourcing, purchasing, suppliers, procurement, best practice, model. Evolving from its roots working with the manufacturing industry to more cost effectively purchase raw materials, strategic sourcing is now charged with finding cost effi. The paper investigates a strategic sourcing and procurement process in a large public organisation in denmark based onparticipating in internal meetings, a workshop, document studies and interviews.
A strategic approach involves understanding the importance of the procurement to the agency in achieving its outcomes, sourcing suppliers and managing relationships to successfully deliver against public policy objectives and business needs, whilst delivering. It can have a profound impact on a companys financials and can strongly influence the purchasing and procurement processes. Mastering procurement a structured approach to strategic. Mppm chapter 3 strategic sourcing and category management.
Information is gathered and used to enable an organization to leverage its consolidated purchasing power to source the best possible values in the marketplace. Strategic sourcing is an approach that procurement organizations use for supply chain management. This involves data gathering around the operating environment, supply markets, and key risks. It is a systematic procurement process and one component of supply chain. Strategic sourcing involves the establishment or modification of acquisition vehicles to better address federal government procurement needs and or more effectively leverage spend, market position, market knowledge e. Sourcing strategy providers evaluation and selection. Purchasing is shifting its focus from daily procurement activities to long term, valueadding purchasing and supply chain initiatives. Before you can procure materials from your suppliers, you must first find and vet those suppliers. Oct 06, 2016 delta bid have produced a 10 chapter strategic sourcing guide. Agencies have not fully adopted a strategic sourcing approach but some have actions under way. Strategic procurement management is the process of planning, implementing, evaluating, and controlling strategic and operating purchasing decisions for directing all activities of the purchasing function toward opportunities consistent with the. The ultimate guide to strategic sourcing purchasecontrol. Strategic sourcing is a method of managing procurement processes for an organization in which the procedures, methods, and sources are constantly reevaluated to optimize value to the organization by allowing them to buy more effectively and efficiently. As a strategic function of the organization, procurement must be engaged in the.
The integration of procurement and corporate strategy is reflective of the transformation of purchasing to supply management. It is much more than simply centralizing procurement. What is strategic sourcing and why is it important. Corporate procurement and strategic sourcing groups are playing a broader and more strategic role than ever in helping organizations accomplish this task. In the past 3 years, procurement volumes have grown significantly in the health. Information is gathered and used to enable an organization to leverage its consolidated purchasing. Strategic acquisition center sac office of procurement. Each week, pasa will be bringing you a new chapter. The strategic procurement planning approach described in this note follows three main steps. Ofpp strategic sourcing strategic sourcing ofpp a structured and collaborative process of analyzing an organizations spend and using the information to make business decisions about acquiring commodities and services more efficiently and effectively 4. For purposes of this paper, strategic sourcing will be defined as the. Strategic procurement management is the process of planning, implementing, evaluating, and controlling strategic and operating purchasing decisions for directing all activities of the purchasing function. Strategic sourcing is a well established and proven method for managing largescale, medium. Sole source pdf this form must accompany purchase requisitions for the sole source procurement of equipment, construction, supplies or services when the.
Strategic sourcing is an approach to supply chain management that formalizes the way information is gathered and used so that an organization can leverage its consolidated purchasing power to find the best possible values in the marketplace. It can have a profound impact on a companys financials and can strongly. Procurement accounts for nearly two thirds of all undp deliveryand the demand for procurement services is growing. How to strategic sourcing chapter 4 procurement and. Ofpp strategic sourcing strategic sourcing ofpp a structured and collaborative process of analyzing an organizations spend and using the information to make business decisions about acquiring. Furthermore, issues like economic and political volatility, technological disruption.
Unlike a transactional based purchasing approach that responds to a need by initiating a solicitation and executing a contract, a strategic sourcing approach. A strategic approach involves understanding the importance of the procurement to the agency in achieving its outcomes, sourcing suppliers and managing relationships to successfully deliver against. Additionally, procurement is transforming into a more strategic function that is aligned to organizational goals and objectives. Strategic procurement incorporates actions aimed at reducing the supplier base, negotiations, communication and maintaining longterm relationships with suppliers ryals and rogers, 2006. Strategic sourcing decision making is the scope of this master dissertation. Strategic sourcing solutions optimize supply chain i ivalua. Strategic sourcing reflects the integration of procurement or sourcing strategy with corporate strategy porter 1998. Traditionally, sourcing was considered to be the identification of new or potential suppliers. Strategic sourcing throughout the product lifecycle.
Strategic sourcing institute for supply management. Strategy sourcing is an approach to procurement whereby the business. What it is what it is not focused on the total cost of ownership tco incorporating. Pdf strategic procurement management lecture notes by. In the past 3 years, procurement volumes have grown significantly in the health, elections, sustainable energy and crisisresponse sectors. Strategic sourcing decisions are, for example, makeor buy decisions and supplier selection. Modern day procurement managers manage procurement and sourcing function both at strategic and operational levels. The bestpractice templates for projects, sourcing events, contracts, and more are based on geps global procurement expertise. A procurement management plan must provide procurement strategies that will allow the business to maximize its benefits in the processes of procurement. Strategic sourcing is the dynamic delivery of internal and external, business or itoriented resources and services to ensure that business objectives are met. Surprisingly,elsewhere in the world,the purchasing word remains prevalent. As businesses today continue to harness the power of globalization to expand performance, the role of effectively sourcing goods and services from suppliers has become inevitable.
Strategic purchasing young procurement professionals. Strategic sourcing is an approach to supply chain management that formalizes the way information is gathered and used so that an organization can leverage its consolidated purchasing power to find the. Through procurement planning and strategic execution, companies can be more aware of the factors and elements that are necessary to be considered before buying materials and or items or. Cips defines reactive sourcing as being the procurement approach where no proactive sourcing strategies have been put in place and so the purchasing and. Strategic sourcing emerges as an important factor to support and integrate the suppliers into the supply chain intelligently this chapter aims to provide understanding of how strategic sourcing. The 7 steps of a strategic procurement process trade ready. By getting involved in and even leading key activities throughout the product lifecycle instead of simply being asked to go and buy the. Whether we call it purchasing, procurement, supply management, sourcing or buying it is. In addition, the individual will be responsible for all phases of sourcing that require the. We proudly present the resulting ebook of this years project strategic purchasing. For example, in april 20, dod was assessing the need for additional resources to support strategic. Heres the fourth installment, you can download the full pdf at the end. Developing and implementing a strategic sourcing strategy cips has formulated positions on strategic sourcing as this is a key activity for purchasing and supply management professionals.
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