The Procurement Glossary » Strategic Sourcing
Strategic Sourcing
Sourcing & RFx
Definition
A structured, data-driven approach to sourcing that aligns supplier selection with long-term business goals rather than one-off price hunting.
Explanation
Strategic sourcing analyses spend and demand, segments categories, develops a sourcing strategy per category, runs the market and manages suppliers over time. The aim is sustained total-cost reduction and value, not just the lowest price on the next order.
Example
For its MRO category, the team runs a strategic-sourcing project: analyse spend, rationalise the supplier base, negotiate framework agreements, then track compliance quarterly.
Related terms
- Sourcing — The upstream procurement activity of finding, evaluating and selecting the suppliers a business will buy from.
- Category Management — Managing related groups of spend as strategic business units, each with a tailored strategy and dedicated ownership.
- Spend Analysis — The process of collecting, cleaning, classifying and analysing purchasing data to understand what an organisation buys, from whom and for how much.
- Total Cost of Ownership (TCO) — The full lifetime cost of a purchase — not just the price, but delivery, installation, operation, maintenance, downtime and disposal.
Related concepts
- Source-to-Pay (S2P) — The widest procurement cycle — sourcing and supplier selection on top of the operational procure-to-pay buying process.
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Frequently Asked Questions
What is Strategic Sourcing?
A structured, data-driven approach to sourcing that aligns supplier selection with long-term business goals rather than one-off price hunting. Strategic sourcing analyses spend and demand, segments categories, develops a sourcing strategy per category, runs the market and manages suppliers over time. The aim is sustained total-cost reduction and value, not just the lowest price on the next order.
Can you give an example of Strategic Sourcing?
For its MRO category, the team runs a strategic-sourcing project: analyse spend, rationalise the supplier base, negotiate framework agreements, then track compliance quarterly.
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