There’s no doubt about it, projects can be crazy expensive – especially major capital projects. And when approximately 90% of those capital project materials and services need to be purchased from a third party, how and where you spend those dollars can make a huge impact on your overall budget and project performance.
With so many suppliers and vendors to choose from, not only do you need to get real smart – and fast – about who you’re partnering with, but you also need to consider implementing a strategic sourcing program to optimize both those partnerships and your overall spend. Well, at least if you want to look good in front of your boss…
So, what exactly is a strategic sourcing program and why should you care?
Strategic sourcing is the structured and collaborative process of critically analyzing an organization’s spending patterns to better leverage its purchasing power, reduce costs and improve overall performance. In other words, the program identifies preferred suppliers who will provide superior service levels at discounted prices. A win-win for all.
At the end of the day, a good strategic sourcing program’s ultimate goal should be to reduce costs while improving the quality of service. This can be achieved by:
- Improving the value to price relationship
- Examining supplier relationship across the entire organization
- Leveraging entire spend
- Understanding category buying and management
- Identifying improvement opportunities
- Optimizing supply-base and developing multi-year contracts that align with corporate strategy
- Sharing best practices amongst the organization
The number one reason you should care? The pay-off.
Firms that employ strategic sourcing are 15-25% more profitable than firms who are NOT sourcing. In addition, projects are much more likely to meet deadlines, perform financially within the budget and exceed quality and performance expectations.
- Additional benefits include:
- Improvements to capital budget planning
- Supply chain risk management
- Better terms for capital purchases
- Best total cost of ownership
- Continuous process improvement
- Consistent service
- Speed to market
- Supplier incentivization
- Sustainable competitive advantage
- Maximized economies of scale
- Innovative strategies
- Dependable performance
Ready to get strategic about your sourcing? JLL offers a best-in-class strategic sourcing program called Synergy, comprised of more than 70 top-tier national and regional suppliers. For more information on this program and how it can significantly reduce costs, while improving your project performance, click here.
About the AuthorMore Content by Samantha Mehal