Strategic procurement involves identifying key areas of spend within the business and identifying ways of adding value through procurement processes. This can be achieved by analyzing the company’s purchasing needs and current spend, creating a procurement strategy and selecting and negotiating with suppliers. It also includes activities such as category management.

Strategic procurement outsourcing requires co-operation from both customer and a tier 1 supplier. Generally, the customer has already analyzed and identified suppliers within a supply chain for ability, quality and cost. However, labor or time constraints make managing this supply chain too time consuming for the customer.