How to cut costs with a strategic sourcing process
November 7, 2021at4:00 PM
As the business landscape becomes more competitive, manufacturers must find innovative ways to cut costs while still assuring the highest quality of their products and services. Achieving this goal requires businesses to constantly improve and re-evaluate their purchasing activities for greater efficiency across the board. This is basically what strategic sourcing is all about. It focuses on the mutual benefits obtainable in a collaborative relationship with the right partners.
Here at Sisler Companies, we have redefined strategic sourcing to include advanced component services, such as automated purchasing, assembly, inventory maintenance, and streamlined shipping schedules. By optimizing your entire procurement process, we help your business maximize its performance and maintain a competitive edge.
Why businesses are turning to strategic sourcing to cut costs
Every supply chain has its own procurement and storage model. However, just because businesses have always operated a certain way doesn't necessarily mean they need to continue doing so — especially when updating your model can mean better use of your finances.
Here’s how a well-executed strategic sourcing process can help cut costs in your business.
Improves the value-to-price relationship
Strategic sourcing benefits both buyers and suppliers. Buyers can negotiate lower prices for high-volume orders, which allows them to maintain competitive pricing for their products. On the other hand, suppliers get to sell huge volumes of products to that buyer over an agreed period, which provides them with greater control over cash flows and inventory over the long term.
Automates sourcing activities and introduces standards
Many manufacturers and procurement managers still manage their sourcing activities using a mix of spreadsheets, buy orders, and emails. These manual efforts are hardly cost-effective and often lack a systematic approach for accurately selecting the most suitable suppliers with the best overall price. Strategic sourcing introduces automation and standardization into the process, which in turn eliminates guesswork when assessing supplier performance.
Ensures supply stability
The global and disruptive nature of sourcing makes it harder to effectively manage procurement operations. A good example is how the COVID pandemic severely disrupted supply chains on a global scale. Businesses everywhere suffered as a result, but those businesses without a well-defined sourcing system in place bore the brunt of the impact. A strategic sourcing process can help ensure that you only partner with high-value suppliers with a greater degree of certainty that they can maintain supply stability even in today’s new normal.
In a bid to cut costs, manufacturers often rely on third-party companies to handle part or all of their logistics needs. This streamlines their supply chain management process and makes it less expensive. A good strategic sourcing process already puts this into consideration. For example, Sisler Companies doesn't just handle supply, warehousing, and distribution, but also labeling and packaging services to further streamline the process and save costs.
Strategic sourcing also paves the way for meaningful relationships with suppliers, which translates to favorable contractual terms over the long term. This is a crucial advantage because it can help businesses reduce costs, implement new applications, and escalate business growth.
Optimize your strategic sourcing process with Sisler Companies
Are you still using manual, trial and error processes for your business’s sourcing activities? Our team at Sisler Companies can help you streamline your supply chain management system and save costs with a tailored strategic sourcing process. You can also take advantage of our professional sales reps’ services to position your business for improved growth and profitability.