A concept called strategic sourcing is going to take center stage at a convention later this month – a concept that a growing number of shippers seek to use to cut their supply chain and related transportation costs. At Strategy2001, which will be held in Miami October 29 to 31, supply chain executives from over 100 companies plan to share information on how to make strategic sourcing work.
Consulting firm Worldwide Business Research, which is hosting the meeting, said that strategic sourcing can provide a high return on investment, but it is often underutilized as an effective tool for managing co
sts. It estimates that within purchasing, 73% of savings can be derived from sourcing. However, according to Hans Heith, chief procurement officer for German telephone giant Deutsche Telekom, one of the most difficult challenges in implementing strategic sourcing has been gaining complete visibility of the expenditure per commodity, per supplier to determine the optimal global supplier for the entire organization. For example, said Heith, a supplier may supply several business units at Deutsch Telekom; however, the company may not be fully aware of the extent of the relationship across its many divisions.
Heith said by implementing new processes and Internet-based systems, Deutsche Telekom has gained greater visibility in spend data to make informed decisions about supplier consolidation. The new processes allow the company to leverage economies of scale or rationalize procurement.