Everything a company purchases -- from lawn-care services to raw materials used in manufacturing -- has a cost. Deciding between vendors and products or services requires careful analysis because purchasing choices have a direct effect on operational costs. To minimize costs and optimize the value gained from each purchase, many companies employ strategic sourcing personnel. A director of strategic sourcing prioritizes purchasing initiatives, establishes policies and objectives, and defines the company’s key sourcing strategies.
Strategic Direction for Key Sourcing Initiatives
A director of strategic sourcing is an experienced leader and purchasing professional. This leader sets strategies related to vendor assessments and purchasing terms and conditions to help ensure products or services ordered are delivered on time at the best quality and value. Strategic direction also includes setting policies and methodologies for sourcing new products or services, approving vendors, and determining when products should be sourced to a single vendor or to multiple vendors to provide for a stable and consistent supply. The strategic sourcing director collaborates with internal business partners to understand demand and supplier trends, and analyzes financial information related to total cost of ownership to identify opportunities for cost reductions.
Strategic Purchasing Leadership
The director of strategic sourcing is responsible for recruiting, evaluating and motivating purchasing professionals. Staff members can include buyers, sourcing managers, cost and spend analysts and contract managers. Leadership duties include creating job descriptions and partnering with human resources throughout hiring, onboarding, performance assessment and termination processes. This leader also takes responsibility for individual and team employee development, sets department objectives and monitors the status to achieving those objectives at departmental and staff levels. Performance measures can include overall spend and cost savings related to strategic sourcing initiatives.
Supplier Relationship and Contract Management
This director oversees critical supplier relationship management and contract management processes to ensure terms are met and termination dates are monitored. Strategic sourcing responsibilities include analyzing current vendor services and cost structures to develop short- and long-range plans to improve sourcing costs and vendor performance. The director of strategic sourcing is the key decision maker if supplier performance concerns are escalated for top management direction. This director also looks for opportunities to consolidate vendors and partner with colleagues to set purchasing standards to improve negotiations and reduce the total cost of ownership for products and services.
Educational Requirements and Salary Outlook
While companies often require bachelor’s degrees for open positions as strategic sourcing directors, candidates with 7 to 10 years of experience and master’s degrees in business administration are likely to get preference. The focus of a candidate’s bachelor’s degree could include engineering, depending on the needs of the hiring company. Some companies also prefer candidates to be certified through the Institute of Supply Management, ISM, as a Certified Purchasing Manager or a Certified Professional in Supply Management. According to the ISM, the average annual salary for directors of sourcing in 2014 was $149,186.