Important questions before formulating a Sourcing Strategy

Before taking a starting step towards a sourcing strategy, every company should decide and establish whether they are mentally, commercially and managerially prepared to do what is necessary to succeed. Clients who miss out on time to think about what lies ahead of them normally have to bear the losses out of it and its cost millions of dollars which is normally lost through delays, as management decides whether they were ready to outsource a particular function. It not mandatory that all of the below listed questions should to be answered before an organization starts preparing their sourcing strategy, but it’s very important that these questions should be answered by the time an organization complete their sourcing cost/benefit analysis:

Important questions to be asked while developing the sourcing strategy

• Organizational Readiness
• Determine Scope
• Management Commitment
• Develop initial criteria to build list of potential
• Create a practical RFP
• Have detailed look at them
• Verify them thoroughly
• Baseline current cost
• Establish meaningful selection criteria and a robust evaluation method
• Honesty

There are many more questions that need to be asked and answered as one moves towards solidifying the sourcing strategy. This is just the beginning and going down this path is not insignificant and neither waste. If an organization chooses to outsource, it can take several months to get to the contract. So it’s always a good practice to begin early if you intend to decide and go for an outsourcing service. The sooner one would begin; the closer they can get to the answers and eventually it works in that way that the closer one gets to the answers, the quicker it is to get to know about the potential savings.

About Author

Prabhakar Ranjan works with Systems Plus Pvt. Ltd.  He is part of the consulting team that delivers Vendor Management Office projects. He can be contacted at prabhakar.r@spluspl.com