Be More Strategic About Your Supply Chain Sourcing

Interrupted supply chains can mean costly delays and unsatisfied customers.

A strategic approach to obtaining what you need to keep your business and products moving, whether you’re sourcing raw materials, manufactured accessories, or transportation capacity can help avoid unforeseen disruptions and create a competitive advantage in today’s changing market.

So just how strategic are you when it comes to sourcing transportation capacity? Ask yourself these four questions:

• Can you break down your spending to the carrier level?

• Can you rank your satisfaction with each carrier?

• Do you know which carriers handle the majority of your freight? Do you know why?

• Do you regularly try to improve the process you have with carriers?

If you answered no to any of these questions, there’s probably room for you to be more strategic when sourcing capacity. According to the Aberdeen Group’s report, How to Build a Strategic Sourcing Organization, there are five steps to follow when building your strategic sourcing program:

1. Understand your spending. Having sufficient visibility to where you spend your transportation budget is a critical first step. Without knowing what you spend your money on, you can’t move onto the next step.
2. Rank all carriers. Order your carriers based on how much you spend with each. You’ll probably find that the majority of your spending will be with only a small number of carriers.
3. Review the top carriers. Look at service levels, on time delivery rates, and other value adds for each. What aspects you compare may vary based on your own operational goals.
4. Change your buying habits. Armed with your new knowledge the carriers that have the most to offer your business—both in cost and added services—return to the market and secure capacity accordingly.
5. Never stop improving. Continue getting results by building on what you’ve achieved. There’s always opportunities to refine your process as you find carriers that align with your business.

Building your strategy should be about staying open to change as conditions shift so you can gain an effective, efficient, and cost-competitive supply chain. According to the Aberdeen Group, a strategic approach to sourcing can (and should be) applied to any part of your business if you want the best results. You can always start small—with one area of your business, like your supply chain—and eventually build up to an organization-wide sourcing solution.

Related: CSCO View of Strategic Sourcing and Segmentation