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.

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.

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.