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Procurement Strategy

Strategic Sourcing vs. Traditional Procurement, I interviewed Arvind Swamy who discussed Strategic Sourcing versus Traditional Procurement.

How did strategic sourcing come about?

15 to 20 years ago when companies only had purchasing departments. The procurement function was treated as a need or necessary evil. When companies would procure their goods or services they would cut a PO. Not much was talked about leveraging suppliers and putting contracts in place to protect companies and suppliers. About 10-12 years ago companies started getting smarter and decided that for any good they have:

They should have a limited number of suppliers

They should be able to manage it. They should understand what they buy and how changes in marketplace effect what they buy and what they pay.

They should know how their suppliers are doing. Are they best in class and delivering good quality?,