7 Ways To Improve Your Strategic Sourcing in 2023

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Strategic sourcing for your products and raw materials has become increasingly important, especially with supply chain challenges continuing across the country and around the world. Not only that, but strategic sourcing can also help decrease your overall costs, make it easier for you to keep inventory flowing, and improve your ability to keep up with your customers’ needs. Try these key tips to help you improve your strategic sourcing in 2023.

1. Take a close look at your business’s actual needs 

Before you start the strategic sourcing process, take a close look at the current, real needs of your business. You want to make sure that you’re focusing your efforts on the right products and materials. 

For example, suppose that you have, in the past, needed a steady supply of a particular kind of battery. After discontinuing or upgrading the product that used them in the past, you may no longer need those items. 

You do not want to waste time focusing on sourcing an item that doesn’t fit the current needs of your business. Instead, make sure you’re focusing on the inventory or materials that you need most now. 

2. Understand what your requirements are for your suppliers

Your supplier needs may vary depending on the focus of your business. Consider:

  • Is ethical, sustainable sourcing important to your brand?
  • Do you want to source from certain areas, including sourcing as locally as possible?
  • Do you need to focus on getting the best prices possible, even if it means that you aren’t able to focus on other elements?
  • Are there any other ethical or practical considerations that you need to consider when selecting a supplier? 

Ideally, you want to choose supplier agreements that fit the unique needs of your brand and make it easier for you to keep up with sustainability, ethical practices, and the other attributes and elements that are important to your business.

3. Look at the current supplier market

Look over the suppliers available for the items you need. What does the market currently look like? Are there multiple suppliers available for the products and materials you need, or do you have limited options for sourcing the items that are most important to your business? Consider:

  • What are each supplier’s strengths?
  • What weaknesses do the suppliers have?
  • What challenges do you note with using a supplier? For example, it may be more difficult to get reliable shipments with a supplier that is located a long way away from your warehouse or business. 

Remember, as you’re building a responsive supply chain, you may need multiple sources for the same product. In some cases, you may want to use different suppliers for inventory in various locations, or you might have multiple suppliers that you can use to get the materials you need to one location when you need them.

As a result, you may not want to rule out suppliers just because they do not manage or produce the inventory volume you need. 

4. Evaluate your current spending

Look at how much you’re currently spending for the inventory you need most often. Where are your highest costs? 

Are those costs in line with your profits? In many cases, you may find that you’re spending more for items that you do not actually need to use on a regular basis, or inventory that might not actually be important to your customer base. 

Other times, you might discover that you have a supplier whose costs are much higher than the other options available on the market. ook at your current spend to help you develop a better overall strategic sourcing plan.

5. Consider the cost of switching suppliers

Keep an eye on the cost you may face if you switch suppliers. A strategic, responsive supply chain may include multiple suppliers. In some cases, you may even have alternative product options for the items your customers need most often. 

However, if you’re already locked into contracts, there may be some unexpected costs associated with changing suppliers, especially if you change them in the middle of the contractual period. Make sure there aren’t any unexpected costs to using more than one supplier (for example, significant volume discounts for using one) and that you won’t be adding to your costs by swapping now. 

6. Carefully evaluate your market growth rate

As part of your strategic sourcing plan, you need to take a careful look at both existing market growth and how the market is likely to continue to grow in the future. How is the market impacted by current changes and challenges? Are there places where your market is likely to grow? Products that are likely to decline in popularity or demand in the nearby future.Make sure you pay close attention to market growth rate and how it may impact your business in the future. 

7. Use the right tools to help you manage your supply needs

Make sure you’re using the right tools as you build sources for your inventory, raise inventory, and ensure that you have the items you need on hand. 

You need tools that will allow you to effectively forecast demand so that you can alter your orders as needed, inventory analytics that will help you keep track of what items you already have on hand and how they’re selling, and tools that will allow you to track the performance of your suppliers, including their overall reliability. 

Automating those processes, where possible, can help you keep a closer eye on your real inventory needs and make alterations to your suppliers, contracts, and orders when necessary to ensure that you have the right products for your customers’ needs. 

Are you looking for a better supply chain planning solution?

Supply chain planning software can help improve your ability to manage your available inventory, track consumer needs, and find the right sources for your products. Contact us today to learn more about how we can help you with your supply chain planning needs.

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