• What Is Strategic Sourcing?

Strategic sourcing is a systematic process aimed at optimizing an organization’s purchasing activities

to maximize value and minimize costs. It involves analyzing spending, selecting suppliers, and

negotiating contracts strategically rather than reactively.

• Why Start with Spend Data?

Analyzing Spend Data: The first step is to understand the organization’s current spending patterns by

analyzing spend data by category and by business unit. This helps identify high-cost areas,

redundancies, and opportunities for cost savings.

Importance of Data-Driven Decisions: Without knowing where and how money is being spent, it’s

impossible to make informed strategic sourcing decisions.

• Why Other Options Are Incorrect:

A . Contacting Vendors: Vendors are contacted later in the process after the spend analysis is

complete and sourcing strategies are determined.

C . Contacting Business Units: While checking for existing contracts is part of the process, it happens

after analyzing spend data.

D . Developing Supplier Performance Measures: This step occurs much later, typically after supplier

selection and contract execution.

• Reference and Documents:

GAO Guide to Strategic Sourcing (2013): Recommends starting with a detailed spend analysis as the

foundation for effective sourcing decisions.