The 7 steps of strategic sourcing, in procurement and in hiring
The 7 steps of strategic sourcing are: profile the spend category, assess the supply market, collect supplier information, develop the sourcing strategy, negotiate and select suppliers, implement, and benchmark. It is a procurement method. Recruiters borrow it to plan hiring for a whole role family from market data instead of filling one requisition at a time.
What is strategic sourcing?
Strategic sourcing A structured way of buying: analyse what an organisation spends on a category, study the market that supplies it, then decide how and from whom to buy. The term comes from procurement, not from recruiting.
A US federal memo from 2005 defines it as analysing an organisation's spending and using that to buy commodities and services more effectively. It starts with a spend analysis.
The 7 steps of strategic sourcing
This is the version usually attributed to the consultancy A.T. Kearney. Step names differ between sources, but the work runs in much the same order.
- Profile the spend category Work out what the organisation buys in one category, how much it spends, who uses it and what they actually need.
- Assess the supply market Study who supplies the category, how competitive the market is, where prices are heading and where the risks sit.
- Collect supplier information Build a long list of possible suppliers and gather what you need to compare them: capability, capacity, quality and terms.
- Develop the sourcing strategy Decide how to buy: one supplier or several, local or global, a long contract or a short one, make in-house or buy outside.
- Negotiate and select suppliers Run the request for proposal or the negotiation, then choose the supplier or suppliers that fit the strategy.
- Implement and integrate Move the business to the new supplier, tell the people who buy from it, and set up how the relationship will be run.
- Benchmark and repeat Measure the supplier against the contract and the market, then start again at step 1 when the category or the market changes.
Why lists differ
There is no single official wording of the 7 steps. One guide calls step 1 understanding the spend category, another getting a picture of the current state. If two lists disagree on names, compare the order of the work instead.
Each step of strategic sourcing, translated for recruiting
Recruiters borrow the method for role families they hire every year. The category becomes the role family and the suppliers become channels and agencies.
| Step | In procurement | In recruiting |
|---|---|---|
| 1. Profile | Spend in one category and who uses it. | Hires per year in one role family, what they cost and where they came from. |
| 2. Market | Who supplies it, how competitive, where prices go. | Where those people work, how scarce they are, what they are paid. |
| 3. Information | A long list of suppliers to compare. | A list of channels, agencies, communities and schools that reach them. |
| 4. Strategy | One supplier or several, make or buy. | Which channels, agency or in-house, hire experienced or train. |
| 5. Select | Proposals, negotiation, supplier choice. | Agency terms, channel budget and the intake with hiring managers. |
| 6. Implement | Switch to the new supplier. | Run outreach, set up the pipeline and the handoff to recruiters. |
| 7. Benchmark | Measure against contract and market. | Measure replies, screens passed and hires per channel, then re-plan. |
The recruiting column is an adaptation, not a standard. No recruiting body publishes an official version.
How recruiters use strategic sourcing, honestly
In recruiting, strategic sourcing usually means planning where hires for a role family will come from before the requisitions open, instead of posting each role and hoping. The useful part of the procurement method is steps 1, 2 and 7: know your volume, know the market, and measure what each channel produced.
The part that translates badly is negotiation. People are not commodities, and a candidate is not a supplier who bids. Use the method to plan channels and agencies, not to think about the people you are trying to hire.
What are the six sourcing strategies?
No standard list of six exists. These six are commonly named in procurement writing, shown with the closest recruiting parallel for each.
| Strategy | What it means in procurement | Recruiting parallel |
|---|---|---|
| Single sourcing | One supplier is chosen for a part, though others exist. | One exclusive or retained search firm for a role. |
| Multiple sourcing | The same item is bought from more than one independent supplier. | Several agencies or channels working the same role at once. |
| Sole sourcing | Only one supplier can provide the item at all. | One niche community or program is the only real source. |
| Global sourcing | Buying across borders for cost, capacity or capability. | Remote or international hiring beyond the local market. |
| Outsourcing | Suppliers provide what was previously done internally. | Recruitment process outsourcing, where an outside firm runs hiring. |
| Insourcing | The goods or services are developed internally. | An in-house sourcing team, or training people into the role. |
Multiple, outsourcing and insourcing follow APICS definitions published by NC State's Supply Chain Resource Cooperative. The single versus sole distinction is common procurement usage.
Steps 2 and 3 for one role, in minutes
Must-haves from a role brief decide who ranks first in the long list.
For recruiters, the slowest steps are usually market assessment and the long list. The Cognitive takes a one-sentence role description, searches ~900M public profiles, including people under other titles, and returns people ranked against your must-haves, each with the reason from their profile.
Strategic sourcing in 4 lines
- Strategic sourcing is a procurement method that starts with a spend analysis.
- The 7 steps run from profiling a category to benchmarking the supplier, then repeat.
- Step names vary between sources; the order of the work is broadly the same.
- Recruiters borrow it for role families, but people are not suppliers and do not bid.
Where the procurement frame helps hiring, and where it misleads
Do
- You hire the same role family many times a year and can plan ahead.
- You spend on several agencies and cannot say which one produced hires.
- You need to decide between hiring experienced people and training them.
Do not
- It turns candidates into line items to be negotiated down.
- A one-off senior search gets a category plan it does not need.
- Benchmarking stops at cost and ignores who stayed and performed.
A strategic sourcing plan for one role family, on one page
- The role family and how many hires it needs in the next 12 months
- Where the last year's hires in it came from, by channel
- Where these people work now and how scarce they are
- The 2 or 3 channels to lead with, and why
- Agency or in-house, and the terms if an agency
- Hire experienced, train, or both, with the training route named
- The measures per channel: replies, screens passed, hires
- The date the plan is reviewed against those measures
Keep reading
Talent sourcing strategy · Where to source candidates · What is talent mapping · Recruitment process outsourcing · How to source candidates · The 80/20 rule in recruiting
Frequently asked questions
What are the 7 steps of strategic sourcing?
The 7 steps of strategic sourcing are: profile the spend category, assess the supply market, collect supplier information, develop the sourcing strategy, negotiate and select suppliers, implement and integrate, and benchmark. The last step feeds back into the first, so the process repeats. Step names vary between sources, but the order of the work is broadly the same.
What is strategic sourcing?
Strategic sourcing is a procurement method for buying better by analysing spend and the supply market before choosing suppliers. A 2005 US Office of Management and Budget memo defines it as the collaborative and structured process of analysing an organisation's spending and using that information to acquire commodities and services more effectively and efficiently.
Who created the 7-step strategic sourcing process?
The 7-step process is usually attributed to the consultancy A.T. Kearney, and at least one procurement guide says it has been in use since 2001. No single official wording exists, which is why lists online name the steps differently. Treat it as a widely taught method rather than a formal standard.
What are the six sourcing strategies?
No standard list of six exists, but six strategies commonly named in procurement are single sourcing, multiple sourcing, sole sourcing, global sourcing, outsourcing and insourcing. Single sourcing chooses one supplier when others exist; sole sourcing means only one supplier exists. Outsourcing moves work to suppliers, and insourcing keeps it internal.
What is the difference between single sourcing and sole sourcing?
Single sourcing is a choice: one supplier is picked even though others could supply the item. Sole sourcing is a constraint: only one supplier can provide it. In recruiting terms, giving one retained search firm a role is single sourcing, while a skill found in only one community or program is closer to sole sourcing.
What is strategic sourcing in recruitment?
In recruitment, strategic sourcing means planning where hires for a whole role family will come from, using hiring volume, market data and channel results, before the requisitions open. It borrows the procurement steps loosely. The most useful parts are knowing your volume, mapping the talent market and measuring which channels actually produce hires.
Is strategic sourcing the same as candidate sourcing?
No. Candidate sourcing is finding and contacting individual people for an open role. Strategic sourcing is the planning layer above it: deciding which channels, agencies and training routes a role family should use, and measuring them. A recruiter can source candidates every day without a strategic sourcing plan, though the plan makes that daily work more focused.
What is the first step of strategic sourcing?
The first step is profiling the spend category: working out what the organisation buys in that category, how much it spends and what users need. The 2005 OMB memo says a strategic sourcing effort begins with a spend analysis. In recruiting, the equivalent is counting hires per role family, their cost and where they came from.
Why does strategic sourcing end with benchmarking?
Benchmarking checks whether the chosen supplier still performs against the contract and the market, and it tells you when to start the cycle again. Markets shift, so a sourcing decision that was right two years ago may not be now. In recruiting, the benchmark is replies, screens passed and hires per channel.
Explore: Talent sourcing strategy · Where to source candidates · What is candidate sourcing · What is talent mapping? · Recruitment process outsourcing