What is Strategic Sourcing | Supply Chain Management Principles.


Strategic sourcing is a process that organizations use to identify, qualify, and select suppliers for goods and services. It is a long-term approach to procurement that focuses on maximizing value and minimizing risk.

Strategic sourcing is important for supply chain management because it can help organizations to:

  • Reduce costs: By negotiating better prices with suppliers, organizations can save money on their procurement spend.
  • Improve quality: By working with suppliers to improve the quality of their products and services, organizations can reduce the risk of defects and recalls.
  • Increase efficiency: By streamlining the procurement process, organizations can free up resources to focus on other areas of their business.
  • Mitigate risk: By diversifying their supplier base and building strong relationships with suppliers, organizations can reduce their exposure to risk.
  • Improve sustainability: By working with suppliers to adopt sustainable practices, organizations can reduce their environmental impact.

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Examples of strategic sourcing:

  • Identify a new supplier for a critical component.
  • Negotiate a long-term contract with a supplier to get a better price.
  • Develop a supplier scorecard to evaluate the performance of its suppliers.
  • Implement a supplier relationship management (SRM) system to improve communication and collaboration with its suppliers.

Strategic sourcing is a complex process that requires a deep understanding of the organization’s needs, the supplier market, and the competitive landscape. However, it can be a valuable tool for organizations that are looking to improve their supply chain performance.


  • Reduced costs: Help organizations to reduce their costs by negotiating better prices with suppliers, consolidating their spend, and eliminating unnecessary costs.
  • Improved quality: Help organizations to improve the quality of their products and services by working with suppliers to improve their processes and procedures.
  • Increased efficiency: Help organizations to increase the efficiency of their procurement process by streamlining it and automating tasks.
  • Reduced risk: Help organizations to reduce their risk by diversifying their supplier base and building strong relationships with their suppliers.
  • Improved sustainability: Help organizations to improve their sustainability by working with suppliers to adopt sustainable practices.

If you are looking to improve your supply chain performance, strategic sourcing is a good place to start. By taking a strategic approach to your procurement, you can save money, improve quality, increase efficiency, reduce risk, and improve sustainability.

Supply Chain and Negotiation Quotes

  • “You must never try to make all the money that’s in a deal. Let the other fellow make some money too, because if you have a reputation for always making all the money, you won’t have many deals.” ~J. Paul Getty
  • “The single most powerful tool for winning a negotiation is the ability to get up and walk away from the table without a deal.” ~Paul Gauguin
  • “The single and most dangerous word to be spoken in business is no. The second most dangerous word is yes. It is possible to avoid saying either.” ~Lois Wyse
  • “Victorious warriors win first and then go to war, while defeated warriors go to war first and then seek to win.” ~Sun Tzu
  • “Lets go invent tomorrow instead of worrying about what happened yesterday.” ~Steve Jobs
  • “A well trained procurement organization can add major dollars to the bottom line of an organization.” ~Dave Waters
  • “Selling is a natural skill. It’s developed as a child. You may know it as persuasion.” ~Jeffrey Gitomer

Strategic Sourcing Resources

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