> ... > Intelligence hub Sourcing Strategic sourcing Benefits

What are the key benefits of strategic sourcing?

Explore the benefits of strategic sourcing and how it can drive value within your organisation

What are the benefits of strategic sourcing?

As more organisations are moving to a strategic sourcing approach and no longer just thinking about the upfront cost, it’s important to understand the benefit. Here are a few benefits of strategic sourcing and what it can bring to your organisation.

Hide this title

Reduce costs

Cost savings is an important benefit that comes from strategic sourcing. If you have high volume goods or services, you can negotiate a better deal from your suppliers, giving you a competitive edge. Equally, if a supplier is providing you with high volume products, it benefits them too. Strategic sourcing also helps to mitigate potential risks, as it involves analysing suppliers process, finances, and capacity. Identifying both internal and external risks of your supplier will help you to become more prepared and come up with a strategy to minimise the risks. This in turn, will lead to reduced costs, if a risk occurs in the future.

Boost long-term supplier relationships

As sourcing becomes more complex, it can often be difficult to build long-term supplier relationships. Strategic sourcing allows you to select the right supplier that both aligns with your sourcing objectives and wider business objectives. By understanding your sourcing objectives and focusing on the suppliers' capabilities, you’ll be able to select high-value suppliers, where you’re certain of a long-term collaborative relationship. By thinking strategically about your sourcing process, you’ll be able to continuously monitor supplier’s performance and offer feedback to meet the agreement. This will also help you spot any potential risks and help focus efforts on what aspects are working well, which will support your future decisions.

Strategic approach brings digital transformation

Relying on manual efforts to process data and emails can be incredibly time consuming and can lead to errors down the line. Strategic sourcing is one area that can be transformed digitally. With the latest technology and software, you can automate your sourcing activities to help you maintain standards and accurately store and capture data. Technology allows you to accurately see and select the lowest cost and optimal source of supply for raw materials, products, and services.

Mitigate supplier risk 

One of the biggest risks involved in sourcing is the disruption with key suppliers. Having good supplier relationships helps to address and avoid supplier disruption. Integrated supplier management is a key approach for sourcing and helps you maintain better relationships. Having done extensive supplier and market research, enables you to effectively select the right supplier, that brings value to your organisation, whilst mitigating risks.

Sourcing strategy

Learn how to develop your sourcing strategy and the importance of finding value within the supply chain.

Sourcing Strategy Strategic sourcing Direct sourcing Direct sourcing strategy

Local sourcing Local sourcing strategy Ethical sourcing Ethical sourcing strategy

eSourcing Single vs sole sourcing Global sourcing Outsourcing

Listen on demand and get the latest practical insights from our panel of procurement and supply experts.

Become a CIPS member

Achieve your potential by becoming a member today. Whether you want to become a studying member or want to upgrade your membership to MCIPS, you’ll receive support and guidance whatever career level you’re at.

Access the latest research, whitepapers and tools across a range of key procurement and supply topics.

Centralised vs de-centralised management guide

Procurement - if structured correctly it can contribute to the organisation achieving a competitive advantage. No one structure fits all and it is dependent on what each organisation wants to achieve. This document will provide you with an understanding and benefits of the different structures of procurement whilst briefly explore application, advantages/disadvantages, and some hints & tips.

Supplier relationship management guide

This article will provide you with a greater understanding of supplier relationship management (SRM), highlight different types of supplier relationships, and outline how to develop and manage them. It will also explore: Kraljic Matrix and supplier positioning, how to build a supplier relationship, pre-contract SRM, post-contract SRM & key skills for SRM.

Procurement strategy guide

This paper summarises five value strategies and will give you an understanding of the benefits they could bring to the organisation if implemented and managed correctly. The areas are: aggregation, standardisation, category management, outsourcing & relationship management. It also briefly explores the drivers for these strategies and includes case studies as examples.

Procurement strategy development guide template

Tools and templates to support you in the building of your procurement strategy.

Expand your sourcing skills

Icon with pin that you would see on a navigation app or website.

Procurement Skills Training

Accelerate your learning and keep your knowledge and expertise up to date with our strategic sourcing training courses.

SOURCING TRAINING

On this page

What are the key benefits of strategic sourcing?

What are the benefits of strategic sourcing?

Hide this title

Reduce costs

Boost long-term supplier relationships

Strategic approach brings digital transformation

Mitigate supplier risk

Sourcing key themes

Listen on demand and get the latest practical insights from our panel of procurement and supply experts.

Access the latest research, whitepapers and tools across a range of key procurement and supply topics.

Expand your sourcing skills

Procurement Skills Training

Navigate to

Navigate to

Navigate to