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Raw materials procurement can get chaotic, so it’s vital for raw material procurement teams to find the best ways to procure raw materials while staying ahead of price increases. 

When you talk to sourcing professionals, one of the procurement challenges that will repeatedly be raised is logistics. The transportation of materials and supplies to production locations, and the delivery of finished products to customers. 

If you’ve been searching for a way to get ahead of price increases and shortages, predictive sourcing might just be the light at the end of the tunnel you have been searching for. 

Most procurement teams focus on OpEx procurement rather than CapEx. OpEx, or Operational Expenditures, includes categories such as raw materials, packaging, and office supplies. The super category covers anything a sourcing team would source daily, and thus has repeatable, scalable, and efficient processes associated with it.

Procurement and sourcing professionals know that strong category knowledge is critical to a successful RFP. That’s why we want to shine a light on best practices for sourcing a category that often gets overlooked: packaging.   

Within many organizations, the procurement team is on the front line in terms of saving money. Never leaving money on the table is always a priority, and the idea is that predictive sourcing can achieve savings by negotiating better deals with suppliers. If cost savings can be achieved painlessly, that takes the pressure off the rest of the organization

The past year has repeatedly proven that the best-laid plans can fall to pieces with little or no warning. Among the many issues we’ve all had to deal with have been shortages. And it’s not just consumers who have experienced the frustration of scarcities, although we all have memories of lining up for toilet paper and disinfectant wipes. Knowing how to act on market changes before they happen is difficult for all, from individuals to large organizations. Many companies have been sideswiped by shortages through their supply chain, leaving them unable to keep up to demand—and in some cases idling production lines—because components and materials aren’t available.

Strategic sourcing is an approach that goes far beyond the traditional procurement method of focusing on cost and reducing costs. As the name suggests, it’s strategic in nature. That means formalizing procurement and supply chain management, looking longer-term than the price of a single contract. Strategic sourcing means tracking relations with suppliers and optimizing an organization’s sourcing program through constant market analysis. Strategic sourcing also means being able to measure performance and continuous improvement.

Surveys of CPOs show some predictable trends in the industry. Cost savings and timely delivery consistently top their list of main priorities—as you would expect. At the board level, there are other areas of focus when it comes to procurement, including predictive sourcing and the supply chain. Again, hardly unexpected. However, something exciting is going on as well.

Sourcing professionals have found their role growing in complexity over the decades. From a focus on keeping costs as low as possible while working primarily with local suppliers, sourcing and procurement have expanded tremendously in scope. A modern organization’s procurement department practices strategic sourcing, managing a tangled global supply chain.