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Five Tips for an Effective Sourcing Strategy

by: Sarah Joson

Friday, August 10, 2012 | Outsourcing News |

Atul Dogra, a Senior Consultant at research and advisory firm Information Services Group (ISG), shared five ways on how businesses that are planning to outsource can construct a well-prepared sourcing strategy.
 

Factors for an effective sourcing strategy

The article posted at Info.ISG-One.com highlights factors that can help foster a sound sourcing strategy for strategic services and functions, which can also enable companies to minimize unnecessary expenditures in the long run and align goals with the objectives of the business.

1. Prepare an outline of your current expenditures. Documenting your business’ current base cost will help simplify future plans as you already have a point of reference. This can be used to generate a realistic comparative cost analysis. For example, you can compare the cost of your current operation to your alternative plans, as well as point out the areas in which budget can be increased or decreased. It will also give you an insight on what is the current market rate for services and if you are complying with market standards.

2. List down elements that fuel the need for outsourcing. Not only will this help you come up with cost estimates - it will also help you create contingency plans for future challenges, as well as create a flexible operation that can adapt to developments in the industry.

3. Study the available service providers. Another thing to consider in sourcing strategies is the scope and scale of service providers. You can start by reviewing each provider’s past clients and activities. Also, keep in mind that service providers are working against several factors such as competitors, service demand, etc. which is why you’ll probably come across a diverse pool of service providers.

4. Create mock-ups. Testing the sourcing strategies by creating mock situations will help you gauge the success of your plans. Apart from making sure that resources are complete and optimized, it will leave less room for mistakes as you have everything that you would need even before the operation starts.

5. Consider all possibilities, even unfavourable ones. The best way to minimize problems in the future is to prevent them. Having a list of all the possible challenges will help you create executable contingency plans that can help minimize the effect on the entire operation.

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