Supply Chain Sourcing and Procurement Strategies

Key activities for managing sourcing & procurement

Sourcing & procurement leaders are searching for ways to improve their departments and drive greater business impact. But competing priorities leave them wondering where to focus time and money. What sourcing & procurement activities matter most?

Don’t waste time on sourcing & procurement activities that won’t move the needle: Our sourcing & procurement activity map identifies the 29 essential activities for managing sourcing & procurement.

Download the activity map to learn what leaders say are the key sourcing & procurement activities to building a world-class organization.

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Procurement leaders to support an increasingly competitive marketplace

Supply chain sourcing and procurement leaders face continuous pressure to optimize costs while supporting increasing customer demands and agility. Yet in their endless pursuit of cost savings, organizations often create unnecessary supplier risks — e.g., pushing away suppliers whose unique capabilities may be critical to their business success.

Supply chain risk poses great concern to most organizations. 89% of participants in a recent Gartner survey said they experienced a supplier risk event in the past five years.

Supply chain sourcing and procurement insights you can use

Supply chain sourcing and procurement leaders must move beyond short-term cost management to leverage supplier capabilities to their maximum advantage in a structured and segmented fashion. This involves aligning supply chain sourcing strategies, driving stakeholder engagement, and setting and communicating the right metrics internally and externally to drive the right behavior.

3 Sourcing and Procurement Principles to Support Inventory Excellence

This research identifies three principles that sourcing and procurement leaders can apply to support inventory excellence while fulfilling functional objectives for cost-optimized supply.

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Leading Through COVID-19: Procurement’s Actions in Response

This complimentary webinar provides a chance to quickly learn what leading organizations are doing to respond during a time of great uncertainty.

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Gartner’s Supply Chain Cost Optimization Playbook for Sourcing and Procurement Leaders

Cost optimization is a fundamental responsibility for sourcing and procurement leaders in supply chain. This research provides a framework and top ideas to optimize costs through both short-term tactical improvements and longer-term transformational changes.

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Future of Supply Chain: 5 Trends to Act on Now

Discover the supply chain leader’s new imperatives and get specific recommendations to reset supply chain strategy and operations.

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New to the supply chain sourcing and procurement role?

To improve supplier management operations and increase performance, supply chain leaders responsible for sourcing and procurement should go to Gartner for the insights they’ll need to succeed in their role.

Gartner Supply Chain Symposium/Xpo™

Join the world's most important gathering of CSCOs, SC executives along with Gartner experts to transform, redefine and innovate your supply chain strategy.

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Saved $600,000 in annual costs by leveraging supplier category intelligence

Client Success Story

Leveraging Supplier Category Intelligence to Reduce Costs

With an impending contract renewal with their largest supplier, a medical device manufacturer was lacking a well-defined strategy to renegotiate terms intended to streamline costs. Gartner helped guide their negotiation strategy and recommended ways the client could leverage vendor category intelligence saving the client up to $600,000 in annual costs.

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Sourcing and procurement strategy questions Gartner can help answer

What is strategic sourcing in procurement?

As the name suggests, strategic sourcing in procurement is the strategic approach to finding the best and most effective procurement solutions for your business.

It encompasses data collection, budgetary spend analysis, product market research and manufacturing/supply chain contracting. The supply chain logistics manager executes the procurement process.

What are some common challenges leaders in sourcing and procurement face?

The procurement cost-saving mindset limits the function’s ability to deliver extra business value. Factors that contribute to this include:

Businesses often seek to optimize total costs rather than cut unit prices.
Mature sourcing functions see supplier collaboration and sustainability as more important priorities than cost savings.
Procurement’s inability to add value to business objectives — beyond cost savings — is the main barrier to earlier involvement in new product development.

Furthermore, most companies are not aware of supply-side risk events or disruptions until far too late in the process and they lack predefined response strategies. Having a supply-side risk prevention or mitigation strategy is key to overcoming any issues that arise in your supply chain from the supplier’s side.

The benefits of supplier collaboration are not being fully harnessed, either. Supply chain logistics strategists rarely have a fully engaged relationship with their suppliers, meaning that collaboration is often more labored and less transparent.

How can sourcing and procurement leaders establish an effective strategic sourcing initiative for their organization?

If your organization lacks a strategic sourcing initiative or has one that is currently ineffective, you need to:

Evaluate the effectiveness of your current procurement function and assess how stakeholders view procurement’s performance and value contribution.
Identify issues that stop suppliers from giving you their best service. For example, why is there a disconnect between the supplier and your logistics/supply chain department?
Design the ideal sourcing strategy in a best-case-scenario situation. Then assess areas that can be modified to suit business and supply chain capabilities.
Create a balanced short-term and longer-term strategy for optimizing your strategic sourcing and supply chain services cost.
Build more functional and trusting relationships with your key suppliers to improve value.
Engage with innovative suppliers and develop “customer of choice” status with them.

Actively aligning business and procurement strategies and enhancing business resilience will improve your opportunities for success in a changing business landscape.