Sourcing: What is it all about?

Sourcing

According to the Sourcing definition, sourcing is the process of identifying, evaluating, and verifying vendors.

Another way to understand what is sourcing is to look at it as a combination of functions that are focused on the identification and assessment of prospective vendors and then engaging with the most suitable vendor. 

The sourcing process is considered complete when the buyer and the supplier reach an agreement related to the contract terms and the transaction's value. 

Organizations hire sourcing experts to help with market evaluation, contract negotiation, and transaction completion. Sourcing activities are undertaken mainly by private businesses and government agencies. Organizations also use sourcing software to streamline and optimize the entire process in terms of cost and time. Effective use of more advanced strategic sourcing approaches, such as early supplier design involvement and supply chain alliances, also require a reduced supply base. Furthermore, if a firm rationalizes and optimizes its supply base properly, the remaining suppliers should only include those that are the most capable of providing consistent goods and services. By definition, average supplier quality will increase as lower performers are eliminated through strategic sourcing.