Skip to main content
Home

Search

Header (Main)
Industry
Mobility Mobility
Automotive
Vehicle Electrification

Vehicle Electrification

Explore
Aerospace Engineering
Optimized Aircraft Downtime and Overhead Costs for a Leading Global Airline with Automated Analytics

Optimized Aircraft Downtime and Overhead Costs for a Leading Global Airline with Automated Analytics

Explore
Rail Transportation
Railway Track Inspection System

Railway Track Inspection System

Explore
Trucks & Off-Highway Vehicles
On the Road to Connected Mobility: An ER&D Perspective

On the Road to Connected Mobility: An ER&D Perspective

Explore
On the Road to Connected Mobility

On the Road to Connected Mobility: An ER&D Perspective

Explore
Sustainability Sustainability
Discrete Manufacturing & Industrial Products
Building Technology & Smart Infrastructure
Electrical Power and Controls
Industrial Machinery
Unlock the future of manufacturing with Factories of the Future

Unlock the future of manufacturing with Factories of the Future

Explore
Process Manufacturing
Oil & Gas
Chemicals
FMCG
ISG Provider Lens™ 2024: Oil and Gas Industry Services and Solutions

ISG Provider Lens™ 2024: Oil and Gas Industry Services and Solutions

Explore
L&T Technology Services and bp sign multi-year engineering services partnership

L&T Technology Services and bp sign multi-year engineering services partnership

Explore
Tech Tech
HiTech
Consumer Electronics
Media & Entertainment
NexGen Comms
Semiconductors
L&T Technology Services Secures $50 Million Deal as a Strategic Partner from a global Network Provider

L&T Technology Services Secures $50 Million Deal as a Strategic Partner from a global Network Provider

Explore
MedTech
Revolutionizing Endoscopy with Software-Defined Innovation in Collaboration with NVIDIA

Revolutionizing Endoscopy with Software-Defined Innovation in Collaboration with NVIDIA

Explore
Public Infrastructure & Smart Cities
Integrated Smart Surveillance Project

Integrated Smart Surveillance Project

Explore
Software & Platforms
LTTS & SymphonyAI to provide AI-based transformation

LTTS & SymphonyAI to provide AI-based transformation

Explore
Services
Digital Engineering & Consulting Digital Engineering & Consulting
Artificial Intelligence
Cybersecure
Security Monitoring
Security Services
Security Solutions
Immersive Experiences
Industry 4.0
Product Consulting
Sustainability Engineering
Sustainable Smart World
5G
LTTS Completes Acquisition of Intelliswift

LTTS Completes Acquisition of Intelliswift

Explore
Product Engineering Product Engineering
Software Engineering
Cloud Engineering
DevOps
Engineering Analytics
Immersive Experiences
Sustenance & Maintenance
User Experience
Voice Innovations
Embedded Engineering
Embedded Systems
Sustenance
VLSI
Wearables Engineering
Mechanical Design
CAE & CFD
CAx Automation
Testing & Validation
Integrated Design, Validation & Testing
Lab as a Service
Testing
Enabling a Paradigm Shift in Testing An LTTS AI Perspective

Enabling a Paradigm Shift in Testing An LTTS AI Perspective

Explore
Manufacturing Engineering Manufacturing Engineering
Smart Manufacturing
Accelerated Operations
Digital Factory & Simulations
Plant Design & Engineering
Supply Chain Engineering
Sourcing & Procurement
Manufacturing & Planning
Accelerated Operations
Digital Factory & Simulations
Line Expansion & Transfer
Manufacturing Automation
New Product Development
Plant Design & Engineering
PLM on Cloud
Manufacturing Execution
Agile Supply Chain
Content Engineering
Material & Parts Management
Sourcing & Procurement
Asset Reliability Centre

Asset Reliability Centre

Explore
Plant Engineering Plant Engineering
CAPEX Project E/EPCM Services
Operational Excellence
Plant Sustenance & Management
Material & Parts Management
Regulatory Compliance Engineering
ISG Provider Lens™ 2024: Oil and Gas Industry Services and Solutions

ISG Provider Lens™ 2024: Oil and Gas Industry Services and Solutions

Explore
Solutions
AiCE
AiKno®
AnnotAI
ARC
Asset Health Framework
CHEST-rAi™
Connected Security
EDGYneer
ESM
EvQUAL
FlyBoard®
Fusion
i-BEMS
Nliten
nBOn
PSM
SafeX
Semiconductor IP
Sensor & Gateway Solution
UBIQWeise 2.0
Insights
Analyst Reports
Blogs
Brochures
Case Studies
eBooks
Events
PoVs
Webinars
Whitepapers
Careers
About Us
Accolades
Alliances
Analysts
Board of Directors
CSR
Engineer At Heart
Engineering The Change
Investors
Nearshore Centers
News & Media
Quality Management
Corporate Sustainability
Testimonials
Contact
Header (Secondary)
Search
Mail
Country
EN
DE
JP
HE
Contact

Breadcrumb

  1. Blogs
  2. Industry
  3. Strategic Sourcing—Waking Up to Supply Chain Inefficiencies

Strategic Sourcing—Waking Up to Supply Chain Inefficiencies

Malhar Deoghare
Malhar Deoghare

Project Manager, Sourcing and Supply Chain Practice

Published on 05 Jun 2017

min read

Strategic Sourcing—Waking Up to Supply Chain Inefficiencies

The Economist talks at length about how the lack of innovation and a heady brew of other macroeconomic factors have impeded global growth over the last decade. Total factor productivity on a global level has not witnessed much movement since 2007, astonishingly taking a dip last year. Prior to the crisis, however, it was on an upward trajectory of 0.9% per year. The ecosystem is already reacting to this situation. The Wall Street Journal observed that industrial manufacturers are “squeezing suppliers for lower costs and shifting existing factories to cheaper locales as they seek to maintain profit margins”. This is a direct reflection of enterprises attempting to treat strategic sourcing and procurement as a core competency area rather than a peripheral activity. Critical Errors – Practice in Loop For the last 20 years or so, the majority of enterprises have been using common tactical sourcing practices to reduce costs and manage vendors, without having achieved much in terms of business outcomes. Due to these ineffective sourcing strategies, even well-designed supply chains have met with a false start. Until such time enterprises recognize this, ill-conceived strategic sourcing and supply chain management (SSCM) programs will continue to plague overall operations.

Strategic Sourcing—A Solution-Based Approach

Consider a product’s lifecycle – once it has been successfully designed, it is time to identify vendors capable of delivering critical materials and assembly support. This is the stage at which strategic sourcing gains relevance. From an operational perspective, it is a powerful tool, which, if implemented accurately, can have a positive impact on an organization’s bottom line and annual P&L report. It does not however involve playing hardball – bargaining with suppliers for every cent. Instead, strategic sourcing focuses on forging and fostering long term relationships with suppliers, and increasing collaboration. Collaboration is central to the success of supplier relationship management. Many are already employing strategies like purchasing small suppliers that provide critical parts or services. Other players are following suit to reduce cost per component and consolidate their supplier ecosystem. With an intervening engineering team, SSCM can further improve business outcomes. In conjunction with design for manufacturability (DFM) and value analysis/value engineering (VAVE), insights into component prioritization (critical vs. non-critical) can reduce component count, in turn, improving production efficiency. As an integral activity across a product’s lifecycle, strategic sourcing is capable of reconciling engineering, manufacturing, sales, and management goals. It can shorten the development timeframe and meet cost targets to make manufacturing of a quality product in a competitive market a repeatable reality. From an aftermarket service delivery standpoint, agile sourcing conventions form an inherent part of strategic sourcing. Complying with them requires a thorough analysis of service considerations and forecasted sub-assembly design changes to deliver cost-effective maintenance and modification solutions.

Connecting the Dots—Virtualization, Service Integration, Opportunity Realization

Traditional linear SSCM models based on discrete progressions were optimized based on four variables – volatility, volume, velocity, and visibility. While achieving cost efficiencies and reducing time-to-production continue to be key objectives, CPOs should begin to focus on implementing digital technologies. Towards this end, developing ‘always-on’ digital supply networks (DSNs) could help thread together every silo in an existing supply chain and assimilate ecosystem partners seamlessly. Fueled by information from multiple sources and locations, an open DSN can be used to create virtual simulations of the sourcing and supply network, which can be leveraged to inform the physical world. This will enable CPOs to develop and implement key business decisions quickly, and at reduced risk. DSNs deliver an integrated view of the network and rapid scenario-based latency responses to volatile situations. Going forward, the digital epoch will cause further mutation – sourcing is likely to deviate away from its traditional cost-based approach, and focus more on talent acquisition to drive such transformation. Although it might seem like an OPEX burden to invest in cultivating or retaining subject matter experts, it will prove worthwhile to shift towards a more fluid, service-driven supply chain model with less reliance on actual infrastructure. To jumpstart this transition, businesses need to engage outsourcing SSCM partners to help their task force with back-office operations. Once operations stabilize, outsourcing volumes can be tapered off to the minimum.

Relevant Blogs

Europe’s IIoT Tale: From Islands to a Unified Digital Unit
Connected Manufacturing: Blurring the Lines with IIOT
The ROI from IoT – A Quantification Framework
Explore All

Stay Relevant With Us

Subscribe to our blogs

Malhar Deoghare
Malhar Deoghare

Project Manager, Sourcing and Supply Chain Practice

Malhar Deoghare is responsible for building solutions associated with sourcing, supply chain management, and supplier quality management for direct materials and services. He has over 15 years of experience in leading various direct and indirect sourcing and procurement operations and improving sourcing business processes.

Footer Navigation
  • Industry
    • Mobility
      • Aerospace Engineering
      • Automotive
      • Rail Transportation
      • Trucks & Off-Highway Vehicles
    • Sustainability
      • Discrete Manufacturing & Industrial Products
      • Process Manufacturing
    • Tech
      • Consumer Electronics
      • MedTech
      • Media & Entertainment
      • NexGen Comms
      • Semiconductors
      • Software & Platforms
      • Public Infrastructure & Smart Cities
  • Services
    • Digital Engineering
      • Artificial Intelligence
      • Cybersecure
      • Security Monitoring
      • Security Solutions
      • Security Services
      • Immersive Experiences
      • Industry 4.0
      • Product Consulting
      • Sustainability Engineering
      • Sustainable Smart World
      • 5G
    • Product Engineering
      • CAE & CFD
      • CAx Automation
      • Software Engineering
      • Cloud Engineering
      • DevOps
      • Embedded Systems
      • Engineering Analytics
      • Integrated Design, Validation & Testing
      • Lab as a Service
      • Sustenance
      • Testing
      • Testing & Validation
      • User Experience
      • VLSI
      • Voice Innovations
      • Wearables Engineering
    • Manufacturing Engineering
      • Accelerated Operations
      • Agile Supply Chain
      • Content Engineering
      • Digital Factory & Simulations
      • Line Expansion & Transfer
      • Manufacturing Automation
      • New Product Development
      • PLM on Cloud
      • Plant Design & Engineering
      • Sourcing & Procurement
    • Plant Engineering
      • CAPEX Project E/EPCM Services
      • Material & Parts Management
      • Operational Excellence
      • Plant Sustenance & Management
      • Sourcing & Procurement
      • Regulatory Compliance Engineering
  • Engineering The Change
  • Careers
  • Engineer at Heart
  • Resources
  • Solutions
    • AiCE
    • AiKno®
    • AnnotAI
    • ARC
    • Asset Health Framework
    • CHEST-rAi™
    • Connected Security
    • EDGYneer
    • ESM
    • EvQUAL
    • FlyBoard®
    • Fusion
    • i-BEMS
    • Nliten
    • nBOn
    • PSM
    • SafeX
    • Semiconductor IP
    • Sensor & Gateway Solution
    • UBIQWeise 2.0
  • About Us
    • Accolades
    • Alliances
    • Blogs
    • Board of Directors
    • Careers
    • CSR
    • Events & Webinars
    • Investors
    • Media Kit
    • Nearshore Centers
    • News & Media
    • Quality Management
    • Resources
    • Corporate Sustainability
    • Testimonials
LTTS
  •  Twitter
  •  LinkedIn
  •  YouTube
  •  Facebook
  •  Instagram
  • Copyright & Terms
  • Privacy
  • Sitemap
  • info@ltts.com

© 2025 L&T Technology Services Limited. All Rights Reserved.