When you are looking to purchase products, the process can be very confusing. There is a lot of information online that can make it difficult to know where to start. This ultimate guide to strategic sourcing will teach you everything that you need to know about making wise investments. It begins by giving the definition of this great type of sourcing, as well as the stages to follow. You can read the benefits of doing this and then follow the step by step guide that takes you through every stage of buying in an informed and strategic way. It gives you the basics that you need to create a successful business model, enabling you to reduce the risk associated with investing in products, while working in a way that will help you to reach your objectives without distraction and overtake your greatest competitors. The great news is that the information in this article can also make sourcing more fun and less stressful, giving you top tips to find the perfect products and manufacturers. It also teaches you the art of continuously improving the way that you buy, helping your business go from strength to strength. Let’s get started.
What is strategic sourcing?
Strategic sourcing is the process of planning and checking the success of each decision, to make sure purchases are beneficial in the long-term for any business or individual.
The stages of strategic sourcing include:
1. Planning – This is the process of understanding a market, considering any advantages and disadvantages of an idea, determining the type and quantity of products that you want to purchase, finding the right suppliers and carrying out all necessary research. It is important to create an in-depth plan, as this will save time, effort and prevent mistakes further on in the sourcing journey.
2. Implementing – The next step is to put the plans into place, carrying out the purchases from the preferred suppliers and following the steps that you have previously planned. This step is quick and easy, particularly if the planning is done in great detail.
3. Evaluating – During this stage, you need to assess how happy you are with the purchase that you have made. You should think about the quality of the items that you received, the overall experience and things that have gone well, or things that have disappointed you.
4. Amending – This is the stage where you make changes to your future sourcing decisions, based on the evaluation that you have done.
Benefits of strategic sourcing
There are many reasons that you should purchase strategically. These will now be explained in more depth, so you understand how you can benefit from doing this.
Targeted sourcing
This system of finding products means you begin with an objective or target audience, before determining the best products to buy to achieve this. The benefit of this is that there is a lot of thought and consideration that goes into purchases, making sure ideas are likely to work before committing financially.
Less risk
By having a strategy in place that guides your sourcing, you are less likely to make risky decisions. Instead, you will base your choices on reasoning, which typically reduces the risk of making a mistake. It will also help you to maintain a more focused vision of your goals and the ways that you intend to reach these, which prevents you from becoming distracted or making poor impulse decisions.
Continuous improvement
Strategic sourcing helps you to take note of your experiences with particular suppliers and products, making it easier to analyse your decisions. Because of this, it becomes more simple to understand ways that you can improve future purchases.
Overtake competitors
A major part of this model of buying is that it is improved on a regular basis. Many retailers struggle to stand out from the competition or differentiate themselves because they fail to adapt with demand. By following the steps mentioned in this article, you will be able to overtake competitors and ensure you are at the forefront of trends all year round, giving you a competitive advantage while helping your brand to be seen as forward thinking.
Market knowledge
Throughout your research, you will begin to gain a deeper understanding of the overall market. This can often inspire new ideas or help you to understand where your passion lies. Having knowledge of competitors and the market that you want to buy products in can give you a great advantage, helping you to sell your own products and speak with suppliers or manufacturers, as well as giving you ideas of questions to ask. There are countless advantages of this, for example, if you decide to expand your range of fitness products and sell more items, you will most likely be aware of other popular types of product, giving you a head start with your research.
Positive business decisions
The way that this works is by adapting areas of your sourcing process until they are the best that they can be. Continuing the process means that you can optimize every step of sourcing, making each purchase the safest investment it can be, making it more fun and less stressful.
Step by step guide to strategic sourcing
This article will now take you through every step of a strategic sourcing journey. If you follow these steps, you can have a systematic approach to buying, making sure the process is streamlined and straightforward. It will also take a lot of the risk out of the sourcing process, making sure you are fully informed before committing to a purchase and helping you to gain a return on investment.
1. Understand your goals
You should begin by outlining your key goals and objectives. This includes the products that you want to sell, the audience that you want to target, the category of items that you want to stock and any other factors that you know.
2. List your limitations
The next step is to list any limitations to your purchases. This can include the cost you are willing to pay per unit, the maximum quantity of items that you are able to store, the minimum or maximum number of items that you want to buy, or any specific factors that you want to avoid, such as particular colors.
3. Research
Now you have outlined your audience, goals and limitations, it is time to begin researching. Begin by looking at the type of products that your target market purchases. This is a great place to start, as it will help you to identify your niche. As an example, if you want to stock sports products that women aged 20-40 will buy, this can help you to find popular purchases for this type of customer. In this scenario, you may decide that workout bands are a great purchase, which can then help you know what to look at in more detail. Once you begin researching about the products that you are interested in, you will find that you will have plenty of new ideas and begin to find suitable ideas that you would like to potentially purchase.
4. Create a shortlist of potential products to purchase
Once you have done your research, you should now have an idea of the products that are most suitable for you to buy. Create a list of these products and rank them, putting your favorites at the top of the list. At this point, you can look in more depth at each item, checking why they are suitable to help you achieve your objectives. It is important to be very honest with your feedback on every product at this stage, to make sure you benefit from this process.
5. Eliminate unsuitable products on your list
After this, it is time to eliminate any products that you will not end up buying. You must make decisions based on the information that you have, making sure you have justifications for keeping your final choice, or choices. Make sure you stick to your initial goals and limitations, removing any products or manufacturers that cannot help you to achieve your goals. Sometimes, you will have similar items to choose between, which means you must look for factors that make one a better option than the other. At the end of this process, you should be left only with the options that you want to purchase. It can be a good idea to keep a list of back up options, in case you need multiple suppliers or want to change in the future.
6. Find suppliers that stock your desired products
Once you arrive at this point, you know which type of products you want to purchase. This makes it easier to search for suppliers and manufacturers that stock them. One of the best ways to find the right manufacturers is by searching on marketplaces and seeing which options stand out most to you. Create a shortlist of potential suppliers, writing down the pros and cons of each one, making it easy for you to refer back at these notes when you need to.
7. Choose your final supplier
To make an informed decision and determine your chosen supplier, you must make sure you have all of the answers and information that you need. If you have any concerns or queries, you should reach out to the supplier. Consider things such as delivery times, delivery costs, minimum and maximum quantities of items that you can buy, the cost per unit and much more. If there are any points that you do not like about a certain supplier and you are not confident that they can meet your needs, you should not decide on them until you are happy. You should also pay attention to reviews from other customers, as their experiences are likely to be very similar to yours. If buyers say that they have had a positive experience, this is a great sign. You should also take note of any complaints and negative aspects of other customers’ experiences as this could be a warning that the manufacturer may not be right for you. Base your decision on the points that are most important to you. For some people, this will be a reasonably priced manufacturer with fast delivery times. For others, they may prefer to have slower delivery times if it means they can purchase in larger quantities. It all comes down to the individual preferences that you will have listed earlier in the planning stages.
8. Place your order
Now, you should end up with your chosen supplier. This is your favourite manufacturer for your chosen product. When you do this, you should be confident in this decision, due to the amount of work you have put into making an informed decision. Place an order of the size that you need. In most cases, this will be a simple and easy process.
9. Evaluation
The evaluation stage is where you analyse how successful your purchase was. Begin by taking note of the communication and sourcing process, checking you are happy with the level of service. Factors such as delivery time play a large part in this. Then, once you receive the products, you should note down whether the quality of the products was suitable, as well as the packaging, the methods of transport and protection in transit. You should also look at how well they sold, as well as any comments that customers made which could be taken into account to improve your future sourcing decisions. Make sure you note all of these pieces of feedback down, so they can be looked back at before placing future orders. It is very important to do this step, as this plays a key role in making sure you are always improving the way that you buy.
10. Improve and re-order
The next step in the cycle is to improve your order using your evaluation. Look at the things that went well, as well as the areas that can be improved. For some buyers, it can be very simple improvements that are needed, such as buying a larger quantity as they sold out quickly, while for others, it may require you to go back quite a few steps and change the product that you want to sell. As an example, if customers regularly commented that they did not like the colour, you may want to search for a different colour of the same product. Often, the improvement process includes further research, finding ways that you can stock improved items next time you place an order. Finally, you should re-order, continuously re-assessing your success and making changes as required. This process is incredibly popular because it means businesses get more and more successful with every purchase.
Get started now
Now you understand strategic sourcing, it is time to put it into practice. Begin by following the steps outlined in this article to help you stay on track and make the most of your decisions. When you follow this great way of sourcing, you can have fun and enjoy investing in your chosen products, knowing that you have done your research and are more likely to achieve your objectives. All that is left to do now is to get started, so have fun finding your perfect products to buy! The following article will show you 7 step sourcing process.
