Strategic Sourcing

In many businesses, the secret to lower costs, improved profits and a more competitive operation lies in the supply chain. These days, organizations are taking a fresh look at how they purchase products and services, and many are adopting a process called "strategic sourcing."

* Purchases of outside goods and services can consume as much as 60% or more of a business' revenues.

* Just 50% to as little as 15% of these expenses are closely managed in many companies.

* A mere 10% reduction in outside purchasing can increase profitability from 20%-60%.

In many businesses, the secret to lower costs, improved profits and a more competitive operation lies in the supply chain. These days, organizations are taking a fresh look at how they purchase products and services, and many are adopting a process called "strategic sourcing."

With strategic sourcing, major manufacturers, retailers, governments and financial institutions, such as MTS, are achieving double-digit cost savings while strengthening ties with suppliers offering the best quality products and customer service.

Strategic sourcing is also good for innovative and competitive suppliers, including small and medium-sized businesses that might not have imagined they could compete against larger companies for major contracts. Strategic sourcing can even be used by suppliers themselves to achieve similar savings and benefits.

The main objective is minimizing costs, but strategic sourcing takes an enlightened view of the supplier-customer relationship.

MTS recognizes that people, including innovative suppliers, are a valuable part of an organization and focuses on reducing waste or non-value-added costs. It is defined as: "A disciplined, systematic process for reducing the total costs of externally purchased materials, products and services while maintaining or improving levels of quality, service and technology."
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