Four Phases of a Successful Strategic Sourcing Project 

Strategic Sourcing Succesfful Phases | Advanced Purchasing Dynamics | Blog

A successful strategic sourcing project delivers: 

  • Significant savings  
  • Reliable supply 
  • Alignment of supplier capabilities with the needs of the organization for service levels, delivery support, and supplier innovation 

To accomplish this, a focused effort to clearly understand what the organization requires for success is needed before you can even begin identifying potential suppliers. This is the first of four phases for an efficient strategic sourcing project that delivers results. 

Phase 1:  Planning 

Planning refers to the steps to understand the current state and establish consensus on the future state. These pre-market test activities range from reviewing current supplier contracts to segmenting the spend to interviewing stakeholders. The result of the planning stage should be a clearly stated set of 3-5 commodity objectives that are aligned with the needs of the organization, including stakeholders in functions that interact with the supply base. 

Phase 2:  Preparation 

As the planning phase is coming to a close, you can turn your attention to selecting suppliers for the market test as well as developing four key files needed for the RFQ package: 

Preparation to Success
  • Statement of Work that describes the required capabilities and service levels from suppliers 
  • RFQ that clearly states supplier requirements and timing of the market test 
  • Market basket of representative parts with volumes and MOQs for suppliers to quote 
  • Quote review form, including a cost breakdown that identifies the cost details needed for thorough quote analysis 

Suppliers should be selected based on careful consideration of supplier capabilities relative to stakeholder requirements, as well as sufficient capacity to support production needs. Suppliers can be interviewed to compare against an Ideal Supplier Profile, developed in the planning phase, that summarizes all requirements. 

Phase 3:  Market Test 

A strategic sourcing market test is straightforward when you’ve done appropriate planning and preparation. Like a typical RFQ, the market test should include capability presentations from suppliers, multiple rounds of quoting (with feedback provided on each supplier’s quote), and detailed analysis of both quotes and information provided in response to the Statement of Work. The results of the market test should be a selection of suppliers that best meet the needs of the organization while delivering cost savings. 

Phase 4: Implementation 

The focus of the implementation phase is on completing the internal and customer requirements to resource parts. However, there are other important activities: 

  • Establish KPIs to monitor that the project stays on track to deliver on established goals 
  • Develop a project storyboard to plan and track implementation steps  
  • Develop (or update) cost models from the supplier quotes, namely quote validation models to help you ensure that costs stay consistent going forward when design modifications, volume changes, or new parts are needed 

Register for the May 15 webinar
Strategic Sourcing: 8 Simple Steps Before You Market Test

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