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Benefits of Strategic Sourcing

Benefits of strategic sourcing are to fully balance the internal and external advantages of the enterprise, to reduce the overall cost as the purpose, covering the entire procurement process, to achieve the whole process management from demand description to payment.


Benefits of strategic sourcing include the following four important points:


Consider the total cost. Cost optimization is often misunderstood as the lowest price by many managers of enterprises. As long as the purchase price is low, the use cost, management cost, and other intangible capital are seldom considered. Purchasing decisions affect subsequent transportation, allocation, maintenance, replacement, and even product updating. Therefore, it is necessary to have an overall cost perspective and to assess the key cost links and other related long-term potential costs involved in the entire procurement process.


Negotiate on the basis of facts and data information. The benefit of strategic sourcing is that the purchasing process is not a negotiation between rivals, but a process of business negotiation. The purpose of negotiation is not to blindly compare prices and reduce prices, but a win-win communication based on a full understanding of the market and the long-term planning of the enterprise itself. In this process, we need to provide powerful facts and data information for negotiation through overall cost analysis, evaluation of third-party service providers, Market Research and so on, to help enterprises understand their own bargaining advantages, so as to grasp the whole negotiation process and initiative.


Establish a win-win strategic partnership. The win-win concept is seldom used in purchasing. More business managers prefer to win-win. They like that in the process of purchasing, we are always the knives and others are the fish. As a matter of fact, win-win is the truth of "all things are right". It is also an indispensable factor in strategic procurement. Many enterprises with good momentum of development and early start have generally established supplier evaluation and incentive mechanism. Through long-term and stable cooperation with suppliers, the establishment of win-win cooperation benchmark has achieved very good results.


Checks and balances are the basis of cooperation between the two sides. Enterprises and suppliers themselves have a process of mutual comparison and selection. Both sides have their own bargaining advantages. If they have a full understanding and understanding of the supplier's industry, supplier's business strategy, operation mode, competitive advantage, and stable long-term operating conditions, they can help enterprises to find opportunities for each other. Find a balance in winning cooperation.

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