From Wikipedia, the free encyclopedia

Strategic sourcing is an institutional procurement process that continuously improves and re-evaluates the purchasing activities of a company. It is one component of supply chain management.

The steps in a strategic sourcing process are:

1. Assessment of a company's current spend (what is bought where?)
2. Assessment of the supply market (who offers what)?
3. Development of a sourcing strategy (where to buy what, while minimizing risk and costs)
4. Identification of suitable suppliers
5. Negotiation with suppliers (products, prices)
6. Implementation of new supply structure
7. Track results and restart assessment (continuous cycle)


Strategic sourcing was initiated by General Motors in the 1980s.

Outsourcing is a method that can be employed as part of the overall sourcing strategy for services. This involves the transfer of staff and assets to an external or third-party company which then provides them back as a service.

Strategic Sourcing Tools

Sourcing Tools have been developed since the beginning of the year 2000 to support the Strategic Sourcing process. They have developed originally from a Reverse Auction functionality to the full spectrum of the Sourcing process, enabling an entire integration of electronic process. The tools often are presented as the following functionalities:

1. A Supplier Database with enrichment capabilities
2. A Classification System such as UNSPSC or NAICS to "source" the supplier database
3. A collaborative environment for the purchasers to build the specifications
4. A publishing tool for RFi (Request for Information) or RFq (Request for Quote)
5. An integrated messaging system
6. A Reverse Auction Tool
7. An Electronic Negotiation module
8. An awarding functionality
9. A Contract Management Module.
10. Spend Intelligence analysis
11. Integration with Procure to Pay software or applications

Each tool can be stand alone (accessible via a web page for example) or fully integrated to the procurement process.