Strategizing Your Supply Chains For Better Business Alliances
What exactly is strategic sourcing, and why’s it such an important aspect of building growth and strategy?
Strategic Sourcing refers to the process of developing supply channels at the lowest possible total cost, rather than focusing on just the lowest purchase price. It may sound simple enough, but strategic sourcing is a broader term, which requires a specific breakdown.
The key elements that make up strategic sourcing involve improving the tactical day-to-day tasks within your procurement department, such as sourcing items and negotiating pricing and terms.
In our continuing series of developing organically driven business-relationships, we further identify what strategic sourcing means to you and how you can use it beneficially when finding aspects that factor into your company’s procurement cycle.
Having a variety of resources or alternatives puts you in a better position to build competitive pricing and terms.
Identify and Master Your Supplier Contracts
Don’t place all your eggs in one basket. At times, it’s probable to have some scenarios where it pays to invest in one source, making sense operationally and financially.
For example, identifying at least one expert supplier is good practice, but it’s more economical to have multiple qualified suppliers for a service. Understandably, having multiple qualified suppliers provides options for vendors who are occupied. Having a variety of resources or alternatives puts you in a better position to build competitive pricing and terms.
Consider developing a system of Preferred Supplier Agreements (PSAs) for your key vendor partners whenever possible. Connecting your vendor contracts with your supplier builds a stronger business alliance between vendors contracted to offer services (at the prices and terms agreed). With a vendor contract in place, it’s easy to track committed payments and materials against the master contract and add support towards managing the approval process.
Call Ferrandino & Son at (866) 571 – 4609 or email our business development team at email@example.com to learn more about our relationship initiatives.
Create a Better Savings Buzz
Note that every dollar your company saves during the procurement process gets deposited towards your bottom line. A smart approach to sourcing, pricing, and gaining greater contractual terms is by thoroughly looking for savings at every touchpoint.
For example, consolidating your procurement tasks across your organization serves to streamline lower expenses. Your winning outcomes can be fully leveraged to implement simplified procurement processes and supplier management costs when you have a higher transaction volume.
Creating a genuine partnership involves encouraging your vendors to focus more on increasing their quality and service instead of focusing on rigid calculations and metrics.
Connection Is King
From a standard perspective, vendors are necessary agents between you and the services you’re procuring, which can be a contentious relationship at times. This relationship is broken down to pay the lowest price and charge the higher amount to ensure profitability.
However, your business dynamics can change from being combative to a more collaborative relationship, but only if you consider your suppliers as partners in your business.
Creating a genuine partnership involves encouraging your vendors to focus more on increasing their quality and service instead of focusing on rigid calculations and metrics. By doing so, the overall tone of the relationship gains confidence, which then prompts your vendors to renew contracts – knowing they have a better-guaranteed sales agenda.
How you manage your procurement processes, from acquiring skilled labor to streamlining your contracts, all play a valuable part in creating better business relationship goals between you and your suppliers.
Partnerships start from open and fair discussions and acknowledging the terms that were contractually agreed upon. When strategizing with your clients about sourcing new items, listen to their recommendations, and forecasts to lower costs.
Shape your supply chains for better alliances.
Are you looking for the right partner to build a great connection? To learn more about Ferrandino & Son, Inc. contact us now and let the connecting begin!
Phone: (866) 571-4609