What Is Strategic Sourcing?
By Trevor Sheffield
February 7, 2023
Strategic sourcing—just another business buzzword? Or does this strategy work for companies across the world, including staffing agencies? Strategic sourcing is actually a business practice used by many companies. By applying its principles to your own business model, you’ll find yourself succeeding in your recruiting and staffing strategies.
A principle you’re likely familiar with is the idea that the cheapest product is not always the best. Additionally, the most expensive product is not always the best version either. Strategic sourcing takes this idea to the next level. It focuses on collecting data from the entire production process of an item and calculating where the best value can be found. Value as a whole combines the principles of cost effectiveness and success. How can a company create the product the customer is looking for while spending the least amount of money?
Strategic sourcing involves a lot of data collection and analysis. And it doesn’t just end when you’ve found a great way to create your product. It also means you continue to collect and analyze the data, making changes to your process where necessary that can help you improve. Constant improvement is important.
From that point, companies will reassess their relationships with different vendors.
Why Strategic Sourcing Matters for Staffing & Recruiting
Staffing agencies find themselves in a unique position where both sides of strategic sourcing affect them. As the owner of a staffing agency, your product is the ability to provide experienced workers to companies you partner with. You can use strategic sourcing strategies to consider where you’re finding candidates and clients and make changes to your strategy to do so in a more efficient manner.
However, staffing agencies are also vendors who work directly with companies—companies who are working on strategic sourcing themselves. As your client companies analyze their spend and see how they can decrease cost while increasing productivity, they will consider the aspect of receiving employees from your agency. If your clients feel you aren’t providing them with the best quality employee at the best price, then they may end their relationship with you in order to follow the principles of strategic sourcing.
How Strategic Sourcing Affects Your Staffing Agency
This affects your staffing agency in many ways. When considering a strategy for your own business, consider the following questions:
- On average, how many candidates apply for each of your job postings? How many of those candidates do you interview?
- How long does it typically take to go from posting a job to placing the perfect candidate?
- Where do you typically post job opportunities? What other recruitment strategies do you use?
Are you pleased with the answers to those questions? If not, then you’re seeing an opportunity for strategic sourcing! Consider how you can find more effective ways to accomplish your goals. Don’t be afraid to try new things and step out of your comfort zone.
When considering your relationship with companies that are implementing sourcing strategies, ask yourself the following questions:
- How do my prices compare to other staffing agency prices in the area?
- Are my clients happy with the level of professionalism they see in our candidates?
- Am I working hard to create a good relationship between the agency and its clients?
Analyze the answers to those questions as well to see whether you can make a simple change that gives you an advantage. For example, if the answer to the second question was ‘no,’ perhaps you could change the interview questions you ask potential candidates in order to better assess their abilities.
Strategic sourcing is an important part of any business strategy, including yours. When sourcing talent, you’ll need to keep these vital principles in mind so you can cultivate the best possible relationships with your clients while providing the best product possible.
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