Strategic Sourcing

In today’s economic climate, companies are increasingly focused on improving operational performance. Unclear demand trends, stagnant growth, and pricing pressures are forcing companies to restructure operations, tighten supply chains and postpone investments. What is too often neglected, however, is addressing strategic sourcing methods to reduce costs and improve organizational efficiency thereby driving sustainable improvement in procurement performance enterprise-wide.

Strategic sourcing is a process that helps companies take a fresh look at how they purchase products and services to lower costs, improve profits and improve supply chain management. While most organizations implement strategic sourcing initiatives for the purpose of saving money, other reasons include improving acquisition process, supplier performance and minimizing risk.

Strategic sourcing recognizes that people, including innovative suppliers, are a valuable part of an organization and focuses on reducing waste or non-value-added costs. Companies gain a significant competitive advantage by strengthening their procurement practices and policies. With Thomas Group’s proprietary methodology, companies understand current and future requirements and develop a strategy to procure required goods and services. We apply analytical tools and a fact-based approach to negotiate contracts with suppliers, defines key performance indicators, and puts a process in place to monitor and measure suppliers’ performance.

At Thomas Group our goal is not simply to help you reduce operational costs or buy goods and services at low cost; it is to help you create competitive advantage and measurable shareholder value – quickly. We believe that strategic sourcing is a process that helps companies analyze how they purchase products and services to lower costs, improve profits, and optimize their supply chain.

Our Strategic Sourcing consultants use a unique set of procurement tools to help organizations gain maximum control over spending, and achieve savings in the complex and rapidly evolving global marketplace.

The steps in Thomas Group’s strategic sourcing process are:

  1. Assessment of a company's current spend (what is bought where?)
  2. Assessment of the supply market (who offers what)?
  3. Development of a global sourcing strategy (where to buy what, while minimizing risk and costs)
  4. Identification of suitable suppliers
  5. Negotiation with suppliers (products, prices)
  6. Implementation of new supply structure
  7. Track results and restart assessment (continuous cycle)

For each category, we select the appropriate sourcing approach, by:

  • Determining which levers are most applicable for each category
  • Establishing tiered sourcing strategies to be used for each category
  • Developing initial savings estimate potential by category
  • Refining team structure to tackle categories
  • Developing high level workplans

And we apply sourcing methodologies, including

  • Thomas Group’s pre-negotiated sourcing alliance price agreements
  • Thomas Group e-sourcing tools (e.g. eRFI / eRFP, online reverse auctions)
  • A combination of face-to-face and online negotiation strategies
  • Negotiation strategies for tackling suppliers with whom you have no direct leverage

Our strategic sourcing services comprise a full range of procurement offerings, including:

  • Procurement strategy and opportunity assessment - Centered around strategic sourcing and the associated enablers such as spend analysis (direct and indirect spend), process re-design and governance and compliance. We deliver assignments focused on:
    • Procurement strategy
    • Opportunity assessment
    • Accelerated sourcing
    • Process reengineering
    • Supplier tiering, connectivity and relationship management
    • Demand management
  • Strategic sourcing - we deliver analysis and prioritization of key commodities for:
    • Aggregation of spend and contract leverage to identify optimal spend leverage
    • Implementation of governance and controls to realize the identified savings.

Are you interested in learning more about how your company can improve supplier performance and minimize risk?