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Sourcing Strategy


Source: Procurement Glossary
Author: Paul Rogers
Institute: CIPS - UK

Courtesy of


 

A planned approach to sourcing over time.  There are a variety of different strategies that organisations may adopt in respect of sourcing goods and services. The selection of the strategy will depend on the particular circumstances of each acquisition such as the value of spend, risk in the category and the supply market character. Below is a non-exhaustive selection of possible sourcing strategies:

Crowd sourcing Sourcing from within a community of potential suppliers leveraging web 2.0 technologies
Dual sourcing Sourcing from two suppliers simultaneously with, for example, 40% of the business to one supplier and 60% to the other supplier
Ethical sourcing Sourcing from suppliers who observe minimum social, ethical or environmental standards
Global sourcing Sourcing from best value suppliers irrespective of their geographical location
Insourcing Sourcing from internal service providers
Low cost country sourcing Sourcing from suppliers located in economies which enjoy low factor costs such as labour
Multiple sourcing Sourcing from multiple suppliers, for example through a panel contract; different sources may be used at different times, though the business may not be deliberately split to ensure each supplier gets an equal share
Outsourcing The migration of activities previously delivered in-house to an external service provider
Single sourcing Sourcing exclusively from one supplier, although there may be other potential suppliers in the market
Sole sourcing Sourcing exclusively from one supplier as there are technical, design or patent reasons that there is only one suitable source

 

 

 

 

 




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