One of the erroneous beliefs of many companies today, when it comes to turning to electronic procurement, is the concept of strategic sourcing. However, these businesses do not realize the essential function of this procurement concept. In fact, most of these companies simply term cost saving as a “strategic” move, when in reality, they mean cutting expenses and control over budget.

In strategic sourcing, buyers—or the companies looking for products—are actually very careful about evaluating and forming relationships that they build with the suppliers. This “marriage” of trust and relationship between the suppliers and buyers is the key, thus is called a strategy. For an interrelationship to become mutually beneficial, either or both parties have to embrace change in attitude, tradition, and perhaps some beliefs. Since the goal is a lasting relationship, then this means that there is in depth planning, resources consideration, and the like. The strategic configuration, because of its specific processes, can be considered in practice within a company.

Taking up operational processes will absolutely lead the company to attaining its far-reaching goal. It is critical for the development and implementation of the strategy.

The cost of goods or materials primarily trims down a company’s revenue. It is widely known that almost 25% of a business’ revenue is left due to the deduction for purchasing raw materials. So what can be done? An option is that, an enforcing team be formed to ensure compliance of the strategy. It will be in charge of the monitoring and management of the operational processes such that company expenditures, purchasing discounts, and supplier payment are overseen carefully. Such will absolutely increase the business’ net income.

Adopting strategic sourcing requires critical decision making, hence should be planned out well properly. Since it entails long-term planning, then it also requires long operational processes for a strategy to be implemented and, later on, evaluated.   Strategic sourcing is not merely calling a cost cutting measure as “strategic” move, because it does demand long planning that translates to long processes.