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12 Rules of Strategic Sourcing

Apr 14, 2020

In the age of Procurement 4.0, we are bombed with all the news about technology changing our daily work, new concepts in management models, volatile economy, globalization and increasing number of suppliers.

However, every sourcing specialist must bear in mind the fundamental rules for every sourcer out there.

  • Do not see RFI as the only path and neither you shall use eSourcing and eProcurement tools as a crutch

    • Be multichannel, do call, expand the inquiries and don’t blame the eSourcing tools -they are made to assist, they don’t think (yet) – you do!
  • Do not stop looking for leverages

    • Finding added value, in any form, is always a great thing to do. Think of the best ways to assess it. Keep your mind open.
  • Do not forget to write things down

    • Any thoughts? Ideas? Email to be sent? Comment from manager? RFI number? Supplier’s new solution? Company worth checking out? Memo from a colleague? Simple task from boss? —  Remember the fourth question…? You get the point.
  • Position yourself as an attractive partner to do business with

    • Two words – ethics and integrity – meet the commitments you have made to the suppliers, create a win/win approach, motivate and reward.
  • Be the knight of savings

    • No one has to be convinced that savings are the best – remember that cost may be different than money.
  • Don’t lose attention to details

    • Read carefully, don’t skim on the surface of problems/issues – be as specific as possible (but don’t over-specify).
  • Keep in touch

    • Start creating a relation right from the first contact, don’t hesitate to call and ask, be polite and respectful. Know the etiquette and NETiquette. and finally… – answer your phone!
  • Be open-minded and elastic

    • Opportunity knocking? Welcome it. Be mindful of the possibilities, never resist the unfamiliar, bend your rules and exit the comfort zone (from time to time).
  • Negotiate only in the sourcing stage

    • Be step ahead and finish all discussions on the sourcing stage.
  • Be a team-player

    • Integrate into/build a devoted team, motivate others, look for ideas and suggestions – participate.
  • Drive productivity with constant communication

    • Decide when to be transparent, engage people internally and externally, an information has its power, when it is shared information.
  • Make time for risk assessment and see the big picture

    • Looking at the bigger picture is not possible without assessing the risks – find time for analyzing the situation, be aware of the likely future outcomes. In the smaller picture, try to keep your legal team updated and with access to risk-marked documents .
  • Be efficient ! The more efforts you pay at the beginning of sourcing project, the less work you have with finalizing and reaching sustainable results.

    • Prepare well, study and understand category , clients specification and goal of the project.
    • Pay attention to longlisting, get to short list with ease and pick only highest potential suppliers who will ensure success of the project.
    • Do not relay on second chance to source suitable suppliers, it rarely comes!
    • Be aware ! the client makes opinion on your work only once !

Any committed sins we should know about?


1. Ensure suppliers understand your needs:

Detailed and clear specifications are an essential requirement. Stay as specific as possible in your product description, be sure to send up-to-date drawings and samples to potential suppliers, communicate annual and lot sizes requirements. Make sure a supplier fully understands your quality expectations and how performance will be assessed. Provide all specifications in English and with international standards, otherwise a Chinese supplier will have difficulties in understanding e.g. your German drawings or DIN standards.

2. Develop a desired supplier profile:

Prepare a supplier profile using a questionnaire (e.g. RFI) including company size, financial figures, references, technology, certification, etc. are an essential requirement. Pre-evaluate a potential supplier abilities to become a long-term partner with your business. Be aware that the RFI is not a full supplier assessment  – you only want to know if the identified company will be able to make a competitive proposal.

3. Conduct on-site audits with the supplier:

Do not always rely on certificates you will find on the supplier website, in some countries validity and the value of different certificates might be questionable. At the same time, do not exclude a supplier without a certificate in the initial stage of your sourcing process, instead conduct on-site audit with your internal team. Supplier audits is an essential tool for identifying and preventing quality problems in a supplier’s products or processes before the problems spread. Importance of supplier visit is very often justified just after you realize that facility pictures you have seen on the supplier’s website are much different from what you have seen on-site.

4. Focus on Total Cost of Ownership (TCO), not price:

Do not let the price to be the selection criterion number one when choosing the right supplier. Identifying the total cost of ownership requires looking at the entire sourcing process, it is necessary to

assess the full impact of transport costs, warehousing, custom clearance, additional audit costs, samples, trainings, etc.

 5. Do not ignore cultural differences:

When working with supplier from different countries take into account cultural differences and adapt your operational style to match those if your foreign partners. Different cultures conduct business and negotiations in different ways. Using assertive language may be interpreted as strong and confident in your country, however a foreign supplier may consider it as aggressive and rude. A common mistake is e.g. ignoring cultural differences in holidays schedules – do not be surprised when planning a supplier visit or a project launch in August and your potential supplier from South Europe has no staff available.

Bartłomiej Bącik

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