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Manager

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What is Strategic Sourcing?
Definition: A systematic and fact‐based approach for optimizing an organization's supply base and improving the overall value proposition. What it is
Focused on the Total Cost of Ownership (TCO) incorporating customer needs, organizational goals, and market conditions Getting the best product/service at the best value G tti th b t d t/ i t th b t l Driven by a rigorous and collaborative approach Addresses all levers for savings Decisions based on fact based analysis and market Decisions based on fact based analysis and market intelligence A continuous process

What it is NOT
Focused ONLY on cost Getting the cheapest product/service G tti th h t d t/ i Ad‐hoc activities involving only purchasing Focused on “beating up suppliers” Decisions based on opinion, unjustified preference, Decisions based on opinion unjustified preference or complacency A one‐time project or decision

Page 1

Scope of Strategic Sourcing?
The scope of strategic sourcing extends beyond supplier price negotiation and takes into account the total cost of ownership
Amount paid to suppliers
Purchase Price

Demand Drivers Specifications ocu e e t Procurement Practices Internal Processes Inventory Inventory Practices

Total acquisition cost

Internal Policies & Procedures

Operational Operational Practices

Page 2

Advantages of Strategic Sourcing?
Create C t partnerships with suppliers Best practice sharing Cost savings

Access to new suppliers

Strategic Sourcing

Increase quality

Improve operational efficiency ffi i Standardize pricing

Spec

Copyright © 2010 Accenture All Rights Reserved.

Page 3

Objectives of Strategic Sourcing?
Objectives of strategic sourcing surround the reduction of cost while maintaining Obj i f i i d h d i f hil i i i or improving quality
Improve the value‐to‐price p p

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