Mining for Gold: Developing and Implementing a Strategic Sourcing Prioritization Model for the United States Air Force

Abstract

Strategic sourcing involves aligning the processes and effects of the purchasing and supply management function to the organization's overall business strategy. Strategic sourcing aims to add value to the organization through enhanced supplier relationships, total ownership cost reduction, and demand management. In the Air Force (AF), the agency charged with implementing strategic sourcing for all installation-level spend is the Air Force Installation Contracting Agency (AFICA). AFICA needed a way to determine which supplies and services represent the best strategic sourcing opportunity a prioritization model that digs through the mountain of spend to find veins of gold. This research develops a spend analysis prioritization model that mirrors those used by the commercial sector. It marries internal AF spend data to external market data to gain a comprehensive view of each supply and service, and its potential as a strategic sourcing opportunity. Ultimately, 1,706 supplies and services are ranked based on their strategic sourcing opportunity score, thus providing a guidepost for AFICA to assign resources to opportunities with the most potential value. Using this new approach, AFICA can combine supplies and services into related categories to more strategically manage related spend, allowing Category Management teams to thoroughly understand demand, underlying costs, and the market.