Tactical sourcing: A complete guide

Tactical sourcing is a procurement strategy that focuses on fulfilling short-term business needs quickly, efficiently, and cost effectively. It’s used to meet immediate procurement requirements, without extensive processes or approvals.

As such, the procurement cycles are shorter, and turnaround times are faster. However, prioritizing speed can have other consequences, like missed opportunities for cost savings, poor quality control, and higher risk of being affected by supply chain disruptions.

It’s likely that every team will need to rely on tactical sourcing at some time or another, but if all your sourcing is tactical sourcing, you have a problem. This frequently happens to smaller, resource-strapped businesses who get caught in reactive procurement cycles with little time for strategic planning, or teams who haven’t yet harnessed the potential of procurement transformation. 

Whereas tactical sourcing is used to address short-term needs, strategic sourcing focuses on long-term organizational goals, evaluating a range of factors—like cost, quality, reliability, company values, sustainability, and other criteria—to consider the total cost of ownership (TCO).

Here are some of the key differences between tactical sourcing and strategic sourcing.

Timing

To put it simply: tactical sourcing thinks short-term; strategic sourcing thinks long-term.

Tactical sourcing works quickly to fill immediate gaps. Strategic sourcing takes a more considered approach, using in-depth evaluations upfront to find the best solution overall.

Strategic sourcing invests time into research and analysis, incorporating stakeholder involvement, detailed RFPs and RFQs, scenario analysis, and cross-functional approvals to ensure you make informed, data-driven sourcing decisions that drive long-term value for your business.

Organizational needs and goals

Tactical sourcing is reactive, responding to urgent requirements rather than overall organizational needs or goals. Strategic sourcing is proactive, taking business objectives into consideration when making sourcing decisions to align procurement with big-picture company goals.

For example, say your organization is trying to become more sustainable:

• Using a tactical sourcing approach, you source the item you need based on speed and cost, even if there are more environmentally friendly alternatives available.
• Using a strategic sourcing approach, you factor sustainable sourcing into your decision-making. You may choose a more sustainable product or vendor even though it’s slower or more expensive because it aligns with your long-term values and contributes to a broader business goal.

Vendor relationships

Tactical sourcing is frequently transactional in nature. Rather than working with specific suppliers over time, it aims to solve short-term problems in the quickest and most efficient way possible, which can involve making one-off purchases from different vendors who you don’t develop ongoing business relationships with.

On the other hand, strategic sourcing selects suppliers with the goal of fostering long-term collaboration. It seeks out vendors with similar values or goals to create a true partnership, and invests in those vendor relationships to the benefit of both parties (for example, by locking in long-term contracts at discounted rates).

Tactical sourcing has both pros and cons. On one hand, it enables you to respond efficiently to urgent requirements when necessary, which in turn keeps your business running smoothly and efficiently. On the other hand, it certainly shouldn’t be used for everything, and overreliance on tactical sourcing can put your business’s financial health at risk.

Here are some pros and cons of tactical sourcing to consider before making your next purchase.

Pros of tactical sourcing 

• Fast procurement cycles:One of the biggest advantages of tactical sourcing is its speed. It allows businesses to quickly secure the goods and services they need to keep operations running smoothly.. It has fewer requirements, processes, and approvals, which creates speedier procurement cycles from beginning to end. For spot buys or other need-it-now situations, this is a critical factor in tactical sourcing’s favor.
• Flexibility: Since you’re not tied into long-term contracts or specific vendors, tactical sourcing lets you source what you need, when you need it.
• Uses fewer resources: Between fewer approvals, less research, and minimal processes, tactical sourcing requires less time and involvement from your procurement team. (Warning: this can be a pro and a con, as it can mean your procurement team doesn’t have full visibility over all cross-departmental spend.)

Cons of tactical sourcing 

• Higher long-term costs and missed opportunities: Tactical sourcing may result in missed opportunities to build strategic supplier relationships that ultimately save money through long-term contracts or bulk discounts. If you rely on tactical sourcing for a significant percentage of your procurement, these missed cost savings can quickly add up.
• Increased risk: It’s possible that the goods and services you need won’t be available when you need them due to supply chain disruptions or market conditions—and if they are affected by these issues, you may need to pay a premium due to increased demand. If what you’re sourcing is crucial for your organization's operations, this also puts your own output at risk, potentially impacting your business performance or revenue.

Inconsistent quality: If you buy from multiple different suppliers, you may experience inconsistencies or fluctuations in quality.

Tactical sourcing has a specific function—and some very definite benefits for your organization. When used correctly, it facilitates agile procurement processes, enabling you to quickly respond to immediate needs, supply chain disruptions, and market shifts.

All of this means that tactical sourcing has an important role to play in maintaining business continuity. Without the ability to perform fast, short-term procurement when necessary, your business could get stuck in time-consuming processes that slow things down and jeopardize your competitive edge.

It’s clear that there’s a time and place for tactical sourcing—but it’s also clear that it comes with risks. To get the best of all worlds, you need to develop a hybrid sourcing strategy and combine tactical sourcing with strategic sourcing to drive optimal results.

This doesn’t just mean using both tactical and strategic sourcing as part of your overall sourcing strategy: you also need to elevate how tactical sourcing is done in your business, applying some strategic guardrails to ensure it always meets best practices.

Using powerful eSourcing software, you can make tactical sourcing more strategic, by:

• Automating all tactical sourcing to remove manual work and save time while still enabling business users to get what they need
• Implementing autonomous sourcing to ensure competitive bidding to unlock cost savings in categories you previously couldn’t commit time or resources to optimizing
• Creating repeatable automated workflows tailored to your procurement team’s best practices
• Getting visibility over all tactical spend across the business for improved governance and reporting

Keelvar’s one stop shop sourcing solution transforms tactical sourcing, helping you not only save time and reduce costs but also streamline your procurement processes, ensuring you’re always prepared to adapt to market changes quickly..

With Autonomous Sourcing, you can automate 100% of your tactical sourcing, removing manual sourcing tasks and freeing up time for more strategic sourcing work. Using one centralized, easy-to-use platform to manage all procurement gives you greater visibility, reducing rogue spend, bringing more spend under governance, and helping you scale sourcing excellence.

Keelvar’s Autonomous Sourcing handles up to 100% of tactical sourcing to drive better results

Empower business users to kick off tactical sourcing events using natural language and pre-built custom workflows. Then, let your sourcing bots handle the entire process from beginning to end, from selecting pre-approved suppliers to driving competitive bidding, communicating with vendors, and awarding the contract.

Build custom workflows in Keelvar to extend your best practices across your entire organization

And to enhance every part of your procurement, use Sourcing Optimizer to make better decisions for strategic, high-stakes sourcing events. AI-powered scenario analysis helps you evaluate even the most complex sourcing situations, considering price and non-price criteria to help you choose the best supplier for your business’s needs.