Lean Sourcing vs. Strategic Sourcing

In 2006, Aptium Global provides a useful whitepaper focused on creating sustainable purchasing savings via Lean Sourcing. In this whitepaper, it discussed about Lean Sourcing as a sourcing technique that aims to improve productivity by reducing inventory, improving customer service, and increasing output. On the other spectrum is Strategic Sourcing, which is a systematic, data-driven approach to enhance supply base and improve overall value proposition. Both methods offer their own unique set of benefits geared towards optimizing procurement processes, as well as ensuring costs are kept at optimum levels to enable business growth. So, what are their differences?

Let’s look at Lean Sourcing and Strategic Sourcing to better understand the differences and how the two methods can be applied in your business.

Lean Sourcing	Strategic Sourcing
Strategizing for Collaboration and Redesigning Processes The first and foremost advantage of using lean sourcing is proactive strategizing for future success through collaboration. This is achieved by streamlining procurement operations and purchasing in order to improve financial performance.	A One Size Fits All Approach Strategic sourcing relies on using spend analysis data to create a one size fits all approach. While this quick-hit type of management may yield results in the short term, its long term effectiveness leaves much to be desired.
Implementation of Cost Cutting Methods By its very definition, lean sourcing takes advantage of Kaizen strategies and the “lean” style of management. This is achieved by improving logistics management, such as consolidating shipments, inventorying merchandise, and cost analysis.	Quick Fix Savings Without Procedural Changes On the other hand, strategic sourcing promotes a quick fix solution to problems across every industrial sector. The focus here is to make quick cost reductions that deliver savings in the short run.
Better Cost Cutting Methods Lean sourcing relies on effective cost cutting that does not compromise on quality or reliability. This is achieved by providing for a balance between sourcing and operations.	Addressing Different Avenues for Cost Reduction When it comes to cost reduction, strategic sourcing relies on analyzing inventory data, carrying costs, and personnel expenses in order to identify opportunities for savings.
Waste Reduction In line with the lean management philosophy, lean sourcing heavily counts on reducing waste in all forms. This includes wasted time, efforts, and funds. These issues are addressed by improved compliance and process rationalization.	Reliance on Systems and Staff Strategic sourcing is only able to deliver savings when staff and inventory management systems are performing to the max. There is a strong reliance on the human element in order to identify and implement changes where needed.
Collaboration with Supply Partners Lean sourcing counts on collaborating with suppliers in order to develop favorable contract terms, optimize transport costs, and create a strong and effective supply network that minimizes the chances for any disruption.	Supplier Rationalization Strategic sourcing examines geopolitical and financial risks against suppliers based on product or service type. This is followed by supplier rationalization in order to obtain volume discounts and improve product and service delivery.

To sum it up...

Lean sourcing is emerging as an effective technique versus strategic sourcing. When we compare the two, strategic sourcing offers quick fixes that can provide immediate results, although the tactics may not be sustainable. Whereas lean sourcing provides added opportunities for savings through cost reduction, eliminating wasted time and efforts, and improved cost analysis. When it is implemented correctly, lean sourcing also paves the way for improved contractual compliance and developing beneficial partnerships with suppliers and other business partners, which are the core principles of sustainable sourcing.