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Decentralize out of control purchasing to now controlled centralized purchasing

"Bellwether has eliminated the paper in purchasing and allowed us go from decentralized out of control purchasing to centralized purchasing and invoice processing. This has reduced cost and provided us a clear picture of accruals."

Ben Belflower, Reporting & Analysis Manager, Aramark

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What’s the Difference Between Strategic and Tactical Sourcing?

At Bellwether Purchasing Software, we’re committed to improving purchasing managers’ professional quality of life. Whether that means easily automating purchasing processes or providing clear information that can easily be shared with others, we consider ourselves advocates for this field.

Since purchasing isn’t a practice that exists in a bubble, we’ve found that employees from other departments often have questions about different topics that fall within the scope of procurement. One of those topics is what’s meant by the terms strategic sourcing and tactical sourcing. Because we know from our conversations with purchasing managers that this question comes up on a regular basis, we wanted to create a resource that purchasing managers could point people to or even print out as a resource.

What is Strategic Sourcing?

Holistic, long-term and systematic are the three terms that best describe strategic sourcing. The approach to sourcing focuses on both the current and future needs of a company. One of the main focuses of strategic sourcing is having both the lowest TCO and lowest supply line risk. A big part of how strategic sourcing operates is by creating a closed loop link. Since this loop exists between the supplier and customer, it becomes possible to improve elements like delivery on an ongoing basis.

In order for strategic sourcing to be carried out in the most efficient way possible, it needs to properly address relationship management, supplier evaluation and spend analysis.

What is Tactical Sourcing?

Whereas strategic sourcing takes a longer-term outlook, tactical sourcing focuses on activity that’s transactional and short-term. Although there are some aspects of tactical sourcing that can be reactive in nature, it does take a proactive approach to ensuring that purchases are made at optimal prices, as well as that supply is available when it is needed.

This type of sourcing is most commonly found within manufacturing companies that are small to medium in size. Another area where tactical sourcing significantly differs from strategic is there’s no emphasis placed on understanding a company’s overall requirements. The same goes for really digging into what a vendor is capable of doing in terms of helping a company. Instead, most of the quick quote and order processes used in tactical sourcing are focused on providing production operations with the support it requires.

While strategic sourcing may seem like the obvious choice for a company, there are plenty of companies who have found that tactical sourcing best fits their needs. That’s why Bellwether Purchasing Software is designed to fit into a company’s workflow instead of requiring them to change all of their practices. By offering this type of flexibility, our Purchase Manager Software makes it easy to get everyone on-board and subsequently enjoy all the rewards of a properly optimized procurement process.

April 22, 2015
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BY Bellwether
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