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Difference of Strategic and Tactical Sourcing in SAP Ariba Introduction: SAP Ariba Training, a leading procurement and supply chain management solution, offers tools that cater to both Strategic Sourcing and Tactical Sourcing needs. Understanding the difference between these two approaches is essential for organizations aiming to optimize procurement, reduce costs, and build long-term supplier relationships. Strategic Sourcing Definition: Strategic sourcing is a long-term, data-driven, and proactive approach to managing an organization s procurement needs. It focuses on identifying, developing, and maintaining optimal supplier relationships to achieve broader business goals. SAP Ariba Course Online Key Characteristics: 1.Long-Term Focus Strategic sourcing emphasizes long-term contracts and relationships, ensuring stability and reliability in supply chains. 2.Data-Driven Decision Making Decisions are based on market analysis, supplier evaluations, and performance metrics. 3.Alignment with Business Goals Strategic sourcing is aligned with organizational objectives such as cost reduction, sustainability, and risk mitigation. 4.High-Value, Low-Volume Purchases typically involves high-value goods or services that are critical to the organization s operations.

5.Collaborative Efforts Collaboration across departments (e.g., finance, legal, and operations) ensures all perspectives are considered. Features in SAP Ariba: 1.Ariba Sourcing Module oProvides tools for RFPs (Request for Proposals), RFQs (Request for Quotations), and eAuctions. oHelps organizations compare suppliers based on price, quality, and other criteria. 2.Spend Analysis oAggregates spend data to identify cost-saving opportunities. oSupports decisions on supplier consolidation or renegotiation of contracts. 3.Supplier Lifecycle and Performance Management (SLP) oAssists in assessing and on boarding strategic suppliers. oTracks supplier performance over time to ensure alignment with organizational goals. 4.Contract Management oFacilitates the creation, negotiation, and management of long-term contracts. 5.Risk Management Tools oHelps identify potential risks in the supply chain and implement mitigation strategies. Examples of Use Cases: Negotiating a multi-year contract with a raw material supplier to lock in stable pricing. Partnering with a logistics provider to improve delivery efficiency and sustainability. Evaluating and selecting a new IT service provider through a comprehensive RFP process. Tactical Sourcing Definition: Tactical sourcing is a short-term, reactive approach to procurement that focuses on fulfilling immediate needs. It is often driven by urgency, cost constraints, or specific project requirements. Key Characteristics: 1.Short-Term Focus Tactical sourcing addresses immediate procurement needs rather than building long- term relationships. 2.Speed Over Strategy Decisions are often made quickly to ensure operational continuity. 3.Cost-Driven Price is a primary consideration, often taking precedence over other factors like supplier relationships or quality. 4.High-Volume, Low-Value Purchases typically involves routine, low-value items needed to maintain day-to-day operations.

5.Simplified Process The process is less complex, focusing on quick negotiations or spot buying. Features in SAP Ariba: 1.Guided Buying oSimplifies the procurement process for non-procurement professionals. oProvides pre-approved catalogs and preferred suppliers to ensure compliance with procurement policies. 2.Spot Buy oEnables users to quickly purchase items not included in standard catalogs. oLeverages a marketplace-like experience for ad-hoc purchases. 3.Purchase Order (PO) Management oAutomates the creation and processing of purchase orders. oEnsures faster turnaround times for routine purchases. 4.Catalog Management oMaintains an up-to-date repository of approved products and services for quick access. oReduces the need for manual sourcing efforts. 5.Integration with Ariba Network oConnects buyers and suppliers in real time to streamline order processing and delivery. SAP Ariba Training Online Examples of Use Cases: Ordering office supplies like stationery or printer cartridges through an online catalog. Procuring components for a small-scale project with a tight deadline. Spot buying a replacement part for a machine to minimize downtime. Key Differences Aspect Strategic Sourcing Long-term relationships and strategic goals Decision-Making Data-driven, comprehensive analysis Value High-value, critical purchases Process Complexity and evaluations Tools in SAP Ariba Management Supplier Relationship performance monitoring Multi-year contracts, strategic supplier selection Tactical Sourcing Immediate needs and short-term solutions Quick, reactive decisions Low-value, routine purchases Simple and quick, often using pre- approved catalogs Guided Buying, Spot Buy, Catalog Management Minimal focus on long-term supplier relationships Focus Involves detailed RFPs, negotiations, Sourcing, Spend Analysis, Contract Emphasis on partnerships and Examples Ad-hoc purchases, spot buying When to Use Strategic vs. Tactical Sourcing 1.Use Strategic Sourcing When:

oThe purchase involves high-value, critical goods or services. oLong-term supplier relationships are essential. oThere s a need to align procurement with organizational goals like cost reduction or sustainability. oComplex requirements necessitate detailed evaluations or negotiations. 2.Use Tactical Sourcing When: oThe purchase is routine or low-value. oSpeed is critical to address urgent needs. oThere s no time or need for comprehensive analysis or long-term planning. oPurchases fall outside existing contracts or strategic plans. How SAP Ariba Supports Both Approaches SAP Ariba provides an integrated platform that seamlessly supports both strategic and tactical sourcing. Organizations can switch between approaches based on specific requirements while ensuring compliance and efficiency. For example: Strategic Sourcing: The Ariba Sourcing module can be used to conduct comprehensive RFP processes for a new supplier. Tactical Sourcing: Guided Buying and Spot Buy features allow employees to quickly procure low-value items within organizational policies. SAP Ariba Online Training Conclusion Strategic and tactical sourcing are complementary approaches in procurement, each serving distinct purposes. SAP Ariba provides robust tools to address both needs, enabling organizations to optimize procurement processes, reduce costs, and drive value. By leveraging the right sourcing approach for the right situation, companies can ensure operational efficiency while achieving strategic goals. Visualpath is the Best Software Online Training Institute in Hyderabad. Avail complete SAP Aribaworldwide. You will get the best course at an affordable cost. Attend Free Demo Call on - +91-9989971070. WhatsApp: https://www.whatsapp.com/catalog/919989971070/ Visit Blog:https://visualpathblogs.com/ Visit:https://www.visualpath.in/online-sap-ariba-training.html