STRATEGIC SOURCING

Strategic sourcing can be the trigger for releasing resources for investment in growth, as well as for raising competitiveness:

• Strategic sourcing is the most powerful tool a company can deploy to unlock profit, with a return on investment that is measured in the hundreds of percent and payback in months.
• Virtually all companies spend at least two-thirds of their turnover each year on external suppliers - a combination of operating expense and capital outlays (see below).
• Yet, management focuses disproportionately on those activities that they control directly, and less on the role suppliers play in their business.
• Strategic sourcing is not just about negotiating better deals. It also challenges why the product or service is bought in the first place, whether it is the most appropriate specification, what more could suppliers contribute to enhance competitiveness, when outsourcing might makes sense, how well internal productivity measures up against that available externally, and so on.