In todays world of global markets, customers want one point shop for sourcing solutions. The need may be the ability to do volumes, quality to compete in global market or giving products having a competitive cost advantage. All these attributes can be bought in place by an effective procurement program which encompasses certain initiatives like
sourcing solutions which are a interface between a buyer and the seller to play a very vital role of a transaction mediator when the related parties are not known to each other or dont have a past transaction record.
The business model begins with a float of an enquiry for a particular product. The buyer will specify the volumes (monthly, annually or one time), the required quality deliverables and a target cost. Strategic sourcing initiatives by the service provider will identify the suppliers who will have the required expertise to meet the above demands of the customer and have legal and financial entity to give the customer a trouble free service.
A typical strategic sourcing company will have databases and their managers for a type of product. When the required comes in, these managers job is to identify the best fit. This all comes under the planning part. A very important part is thus supplier information management system where in the time loss due to looking out for suppliers is forgone. The database in supplier information management system can help identify the kind of suppliers by a click of a button.
Under the execution part, these suppliers are visited by sourcing company managers and an assessment on the parameters of global supply is judged. Once this exercise is through, then short listing of suppliers on parameters of ethics and financial stability are used to sail the deal through. This plays one of the most important roles of sourcing solutions provider. He not only has to comply with local laws but also has to comply with the suppliers country norms as well. Most of the local suppliers are small to medium level players where they have limited knowledge of product liability. This becomes very important in areas of functional products and a claim or warranty of a lot can offset future prospects of supplier.
Implementing strategic sourcing initiatives helps increase focus on pre-award collaboration, acquisition planning, and the fostering of enhanced business arrangements to better balance cost, schedules adherence and performance. Incorporating these concepts within the established processes leads to further progression of sourcing strategically.
