The following guidelines drive the strategy of strategic sourcing initiatives at Capital One. Whether you work for a large organization or a small shop, use these tips for more successful sourcing events.
CORE SOURCING PRINCIPLES
1. Start the Process Early.
The day you run out of a critical raw material is not the time to start looking for a new supplier. As with any important piece of your business, the more time you allow, the better prepared you will be when you need to make a supplier selection. Give yourself time to study the market, clarify any priorities you have, and craft your sourcing strategy.
2. Optimize the Competitive Environment.
There are lots of options for a sourcing strategy. Your role is to create the maximum competitive pressure for participating suppliers. Getting to know your suppliers and identifying their wants and needs can give you leverage and help you plan your strategy.
3. Control Communications.
In larger scale sourcing events the process can take several months. You should identify 1-2 people close to the deal and mandate that all inquiries are directed to only these people. This can help ensure that the information presented to the suppliers is consistent, coherent, and that there aren’t any “leaks” that can cost you leverage in a negotiation. Remember, information is power.
4. Be Flexible.
Managing the supplier selection process can be difficult. Establish a process but don’t be afraid to pivot if necessary. Just be deliberate when you do. Understand your suppliers are often the most knowledgeable source of information in their market and be open to learning from them. And remember that they are juggling multiple accounts and priorities too. Being a good partner is the first step to building good partnerships.