Question 1: Strategic Sourcing Process
Step 1:
Profile the
Category
Step 2:
Supply
Market
Analysis
Step 3:
Develop
the
Strategy
Step 4:
Select the
Sourcing
Process
Step 5:
Negotiate
& Select
Suppliers
Step 6:
Implement &
Integrate
Step 7:
Benchmark
& Track
Results
Background Question 1 Question 2 Question 3 Question 4 Lessons Learned
• To guide the supply management group to
make optimal purchasing decisions, a
strategic sourcing process should be
implemented.
• We formed seven steps that address the
most important action items.

Step 1: Profile the Category
Background Question 1 Question 2 Question 3 Question 4 Lessons Learned
1
• Define the category and commodities in it.
2
• Quantity used? Types? Sizes? Who are users? Locations? Processes?
3
• Data must be documented in detail.

Step 2: Supply Market Analysis
Background Question 1 Question 2 Question 3 Question 4 Lessons Learned
1
• Identify local and global suppliers.
2
• Analyze them for potential risks and opportunities.
3
• Calculate raw material prices, labor, and transportation.

Step 3: Develop the Strategy
Background Question 1 Question 2 Question 3 Question 4 Lessons Learned
1
• Decide where to buy while minimizing risk and cost.
2
• Assemble cross-functional team.
3
• Alternatives to current suppliers? How competitive is marketplace? How open
are users to new suppliers?

Step 4: Select the Sourcing Process
Background Question 1 Question 2 Question 3 Question 4 Lessons Learned
1
• RFP to solicit bids.
2
• Specifications, delivery, and service requirements.
3
• Pricing breakdown, legal and financial terms and conditions.

Step 5: Negotiate & Select Suppliers
Background Question 1 Question 2 Question 3 Question 4 Lessons Learned
1
• Reduce bids to valid ones. Ask for clarifications if needed.
2
• Multiple rounds of negotiations. Establish a short-list.
3
• Approval and sign-off by team.

Step 6: Implement & Integrate
Background Question 1 Question 2 Question 3 Question 4 Lessons Learned
1
• Notify selected bidder.
2
• Include bidder in implementation process.
3
• Communicate improvements, processes, changes in delivery, service
requirements, and pricing.

Step 7: Benchmark &Track Results
Background Question 1 Question 2 Question 3 Question 4 Lessons Learned
1
• Start of continuous cycle moving forward.
2
• Benchmark categories, monitor results, ensure full value is achieved.
3
• Back to Step 1 to re-assess constantly evolving markets.