Strategic Sourcing & Category Management
Strategic Sourcing is smart purchasing. It's purchasing with organizational goals and mission in mind. Strategic sourcing looks at immediate needs but also at the long term view. Strategic sourcing is a way to maximize value while minimizing cost. It can be defined as a collaborative team-based approach that aligns sourcing goals with the organization’s mission and vision while leveraging targeted expenditures with the best vendors to maximize value. It starts at the center of the organization but reaches out to all corners. The goal is usually to reduce costs, improve quality and convenience while optimizing inventory, improving lead time and rightsizing the supply base.
Strategic Sourcing has three (3) basic components: category planning, sourcing projects, and supplier performance measurement. Each is a team activity, requiring collaboration between purchasing and other stakeholders. This document will provide an explanation of the basic tasks and provide templates which indicate the information needed to complete them.
Category Planning starts with the definition of the scope of the 'category' and a delineation of any segments and sub-segments within it. A category is defined for our purposes as 'a family of products or services that share similar attributes or similar functions'. The spend analysis process groups purchases of goods and services together into category families that can be leveraged for maximum utility. The second part of scope definition examines not only what is bought but where the category and sub-categories are used within the organization. This allows the organization to identify key stakeholders for each category. Categories used by only a single sector of the organization may be handled differently than those used across geographical and departmental boundaries.
Calyptus has completed over 500 strategic sourcing projects on behalf of clients, has worked with over 20 private and public sector clients in the development of category plans covered over 80% of their spend. We have had stand spend analysis projects, completed directed procurements on behalf of clients, and have then trained the organization on the process and methods for implementation.