How do Sourcing Managers go about choosing the right supplier for a project? Are there specific steps that you should follow to ensure that you get the best results? Are there benchmark practices that you, as a procurement manager, should take note of?
Strategic sourcing is a 7-step process with several considerations. And cost-efficient, systematic sourcing is a process that requires thoughtful preparation.
To help you keep track of all the necessary steps, the following simple vendor management checklist is offered as a guideline:
1. Have you identified your requirements?
Before you even start crafting your RFP (Request for Proposal), take a moment to consider whether or not the service or product that you want is actually essential to your business. Is it something that is required for your business? Is the service critical to operations? Is it something that will improve business performance?
Make sure the product or service that you are trying to procure isn’t already readily available in your company.
Remember, one of the most important goals of streamlining your strategic sourcing and procurement processes is saving money. This requires taking a closer look at resources already available in your organization.
2. Identify and estimate the cost of your procurement
A Deloitte study notes that 74% of CPOs (Chief Procurement Officers) cite cost reduction as a strong business priority. That said, it’s essential that companies ensure due diligence when it comes to researching market prices of services and products.
Establishing an estimate will provide an overview regarding whether your procurement costs meet or exceed your allotted budget.
3. Seek funding approval
Before you send out an RFP, make sure you have the necessary funding to back it up. You don’t want to jumpstart the process by seeking suppliers first, only to find out executives don’t agree with your proposed budget. This will only lead to ruining supplier relationships.
4. Determine the best procurement strategy
A strong purchasing strategy is one of the most cost-effective and efficient ways companies can create value for their business. It will help ensure longevity of supplier relationships, create positive working environments, and establish transparency in business processes. Often, automating the process via an eSourcing platform is the best way to go about it. Not only is the whole process simplified, sourcing managers can also monitor and track the entire process every step of the way.
5. Evaluating suppliers and awarding projects
Be sure to create clear criteria for evaluation that potential suppliers can access and review. This will help them identify key areas about the project that they need to focus on. For example, if you’re trying to expedite the completion of a project, it might be to your advantage to identify speed as a priority. If saving money is a priority, cost might be something that requires greater emphasis.
The strategic sourcing process can be complex. Fortunately, keeping this simple checklist in mind will help make sure that you have every critical element in place to make the right decisions regarding suppliers.
Take advantage of Vendorful’s eSourcing functionality and find out how you can get the most value out of it for your business. It’s as simple as point and click. Speaking of which, you can point a click your way to a demo of Vendorful.