Strategic Sourcing

We will look at how organizations decide which suppliers to procure from, and what different factors might affect their sourcing strategies.
In this we shall
• Look at the sourcing process, and consider the complexities in strategic sourcing
• Consider what makes a good supplier
• Examine the Kraljic’s Sourcing Matrix
• Critique the potential and risks of partnership sourcing
On completion of this Week, you will be able to
• Explain the importance of strategic sourcing
• Present a model for supply base segmentation
• Discuss the benefits and limitations of partnership sourcing
Leturecast
In this lecturecast, we will explain the importance of strategic sourcing, present a model for supply base segmentation and discuss the benefits and limitations of partnership sourcing.
Reading
This week’s reading takes a deep dive into a number of critical issues related to sourcing. There are a number of articles and blog pieces looking at the use of the Kraljic mattix in more depth, as well as journal articles that report results of research conducted of critical issues including; how different sourcing relationship approaches affect the issues that buyers and sellers seek to have influence over; the challenges of sourcing from start-up firms; and how supplier relationships may (or may not) be rebuild following relationship failure.
Reading
Dixit, V., 2020. Risk assessment of different sourcing contract scenarios in project procurement. International Journal of Construction Management, pp.1-13.
Kraljic P., (1983), “Purchasing must become supply management”, Harvard Business Review, Sept-Oct, p.109-117
Gomes-Casseres, B. (2011) ‘A Partnership Is Not a Purchase Order’, Harvard Business Review Digital Articles, pp. 2–4.
Montgomery, R. T., Ogden, J. A. and Boehmke, B. C. (2018) ‘A quantified Kraljic Portfolio Matrix: Using decision analysis for strategic purchasing’, Journal of Purchasing and Supply Management, 24(3), pp. 192–203. doi: 10.1016/j.pursup.2017.10.0

Discussion Forum
After reading the additional learning materials for this week, provide a short summary of why each of the two dimensions of the Kraljic Matrix (supply risk and profit impact) are appropriate to the development of sourcing strategies, as applied to your own organisation, and what might be missing from only using these two dimensions. Read other learners’ posts and try and find an example from a different industry than your organisation is in, and comment on the similarities and differences in why the dimensions can be used.