Nowadays, suppliers do not solely have an impact on reducing costs and improving products or services but are more involved in the product design and development process. Hence, selecting the right suppliers and composing the optimal supply base is one of the most challenging parts of strategic purchasing.
Sourcing is a part of the purchasing process that aims at selecting and managing suppliers aligned with strategic organizational goals and objectives. The six sourcing techniques are global Sourcing; Category Management; Portfolio Model; Best Value Procurement; Supplier Selection: and Single versus Multiple Sourcing.
Global sourcing can be identified as seeking for foreign supply sources to include in the overall purchasing strategy. Outsourcing is engaging an outside agency to manage a business function or process of the company. Global sourcing, which is quite similar to offshoring, except that the specialized capabilities are accessed from external agents across geographical borders. The main incentive for outsourcing is cost reduction, especially on labor. However, companies are more exposed to problems due to differences in standards and lack of control.