What are the key benefits of strategic sourcing?
What are the benefits of strategic sourcing?
As more organisations are moving to a strategic sourcing approach and no longer just thinking about the upfront cost, it’s important to understand the benefit. Here are a few benefits of strategic sourcing and what it can bring to your organisation.
Reduce costs
Cost savings is an important benefit that comes from strategic sourcing. If you have high volume goods or services, you can negotiate a better deal from your suppliers, giving you a competitive edge. Equally, if a supplier is providing you with high volume products, it benefits them too. Strategic sourcing also helps to mitigate potential risks, as it involves analysing suppliers process, finances, and capacity. Identifying both internal and external risks of your supplier will help you to become more prepared and come up with a strategy to minimise the risks. This in turn, will lead to reduced costs, if a risk occurs in the future.
Boost long-term supplier relationships
As sourcing becomes more complex, it can often be difficult to build long-term supplier relationships. Strategic sourcing allows you to select the right supplier that both aligns with your sourcing objectives and wider business objectives. By understanding your sourcing objectives and focusing on the suppliers' capabilities, you’ll be able to select high-value suppliers, where you’re certain of a long-term collaborative relationship. By thinking strategically about your sourcing process, you’ll be able to continuously monitor supplier’s performance and offer feedback to meet the agreement. This will also help you spot any potential risks and help focus efforts on what aspects are working well, which will support your future decisions.
Strategic approach brings digital transformation
Relying on manual efforts to process data and emails can be incredibly time consuming and can lead to errors down the line. Strategic sourcing is one area that can be transformed digitally. With the latest technology and software, you can automate your sourcing activities to help you maintain standards and accurately store and capture data. Technology allows you to accurately see and select the lowest cost and optimal source of supply for raw materials, products, and services.
Mitigate supplier risk 
One of the biggest risks involved in sourcing is the disruption with key suppliers. Having good supplier relationships helps to address and avoid supplier disruption. Integrated supplier management is a key approach for sourcing and helps you maintain better relationships. Having done extensive supplier and market research, enables you to effectively select the right supplier, that brings value to your organisation, whilst mitigating risks.
Sourcing strategy
Learn how to develop your sourcing strategy and the importance of finding value within the supply chain.
Find out more about Sourcing Strategy
Sourcing key themes
- descriptionSourcing
- descriptionStrategy
- descriptionStrategic sourcing
- descriptionDirect sourcing
- descriptionDirect sourcing strategy
- descriptionLocal sourcing
- descriptionLocal sourcing strategy
- descriptionEthical sourcing
- descriptionEthical sourcing strategy
- descriptioneSourcing
- descriptionSingle vs sole sourcing
- descriptionGlobal sourcing
- descriptionOutsourcing
- descriptionSourcing
- descriptionStrategy
- descriptionStrategic sourcing
- descriptionDirect sourcing
- descriptionDirect sourcing strategy
- descriptionLocal sourcing
- descriptionLocal sourcing strategy
- descriptionEthical sourcing
- descriptionEthical sourcing strategy
- descriptioneSourcing
- descriptionSingle vs sole sourcing
- descriptionGlobal sourcing
- descriptionOutsourcing
Listen on demand and get the latest practical insights from our panel of procurement and supply experts.
Become a CIPS member
Achieve your potential by becoming a member today. Whether you want to become a studying member or want to upgrade your membership to MCIPS, you’ll receive support and guidance whatever career level you’re at.
Access the latest research, whitepapers and tools across a range of key procurement and supply topics.
Procurement strategy guide
Supplier relationship management guide
Procurement strategy development guide template
Procurement strategy development guide template
Expand your sourcing skills

Procurement Skills Training
Accelerate your learning and keep your knowledge and expertise up to date with our strategic sourcing training courses.