Strategic sourcing and procurement is a critical aspect of supply chain management. Similar to supply chain management career paths, procurement career paths can also be quite expansive. Professional sourcing is also a rapidly growing field that attracts a broad array of skill sets, from purchasing agents to wholesale and retail buyers, and even certified purchasing professionals.
The practice of procurement involves allocation resources – or spend – to procure all necessary items to produce your product. Categories of spend are diverse and cover raw materials, components, packaging, and finished goods on the Direct procurement side. Whereas indirect procurement involves sourcing business-related equipment and services, ranging from temporary labor, accounting, information technology, MRO, and many more.
If you’re considering or beginning a career in strategic sourcing and procurement you may find that it’s overwhelming to gain a comprehensive understanding of the myriad procurement career paths to choose from and ultimately decide where to build your career.
We’ve put together a high-level overview of the various career paths that exist within the field of strategic sourcing and procurement. This should help you better understand what to consider when evaluating and selecting the best career path for you.
For you employers looking to hire procurement talent, be sure that you’re working with a specialized recruiter. Ask them the difference between direct and indirect procurement. The field is advancing rapidly and much too nuanced to not work with a supply chain recruiter or procurement recruiter.
For more engaged information on strategic sourcing and procurement, you can view our webinar on this topic.
What is Strategic Sourcing & Procurement?
As defined by the Institute of Supply Management, procurement is an organizational function that includes specifications development, value analysis, supplier market research, negotiation, buying activities, contract administration, inventory control, traffic, receiving, and stores.
Procurement professionals help to ensure a buyer receives goods, services, or works at the best possible price when considering quality, quantity, time, and location. Almost all purchasing decisions include factors such as delivery and handling, marginal benefit, and price fluctuations.
While the discipline encompasses a wide variety of areas, there are a few important things to distinguish within procurement:
- Direct: This involves sourcing for any materials, including raw materials, commodities, components, and finished goods, made available for sale or resale.
- for Retailers- any product available for purchase
- for Food manufacturers- all ingredients used to manufacture a finished good, along with packaging
- for Automotive companies– all components assembled into a new vehicle
- Indirect (services): Sourcing and procuring services or supplies to support the ongoing needs of a business that are not sold to customers.
- Machinery used to manufacture products
- Information Technology such as computers, printers, and phones
- Utilities such as power and water
- Service Providers such as 3PLs, Auditors, Consulting Firms,
- Temp Labor, Insurance, Facilities Maintenance, etc.
- Tactical Sourcing: A short-term, transactional activity, commonly in small to medium-size manufacturing organizations. Tactical sourcing involves routine and sometimes reactive approaches to purchasing materials & supplies.
- Strategic Sourcing: A long-term and holistic approach to acquiring the current & future needs of an organization at the lowest total cost of ownership (TCO) and lowest supply risk. This process creates a link between the customer and the supplier to ensure continuous improvement in quality, delivery, cost, and service while providing the means to achieve optimal efficiencies.
Most large corporations have revamped their procurement organizations over the years to separate the strategic sourcing function from the operational side of procurement. This allows a stronger and more proactive focus on strategic sourcing and ensures that the procurement organization as a whole is adding maximum value as it relates to quality, cost, service and risk mitigation.