Sourcing
Sourcing is the work of finding, evaluating, and selecting the suppliers a company will buy from: identifying candidates, requesting quotes or proposals, comparing them on price, capability, and risk, negotiating terms, and awarding the business. It is the upstream half of procurement; purchasing then executes orders against the suppliers sourcing has chosen.
Examples
Competitive RFQ: A robotics startup sources a 6-axis load cell. Five suppliers quote, ranging from $212 to $390 at 2,000 units per year. The team awards to the second-cheapest at $238 because that supplier calibrates in-house and quotes a 6-week lead time against the low bidder's 14.
Dual-source award: For a high-risk injection-molded housing, sourcing splits the award 70/30 across two molders. The 30% supplier costs $0.22 more per part, about $13,000 a year at 60,000 units, priced as insurance against a single point of failure.
Re-quoting an incumbent: After two years of 4% annual price increases, a buyer re-quotes a machined shaft. The incumbent returns to its original pricing within a week of seeing credible competition.
Definition
Every sourcing decision sets the cost, quality, and risk profile of a part for years, which is why the activity gets its own name inside procurement. The core loop is consistent: define the requirement, identify suppliers who can meet it, run a competitive event, evaluate quotes on more than unit price, negotiate, and award.
Practitioners split it into two modes. Strategic sourcing treats a category as a multi-year decision: total cost, supplier development, dual-source strategies. Tactical sourcing handles the immediate need: get three quotes for this bracket, pick one, move on. Both are legitimate. Trouble starts when a strategic category gets only tactical attention, one rushed quote at a time.
Selection is also a screening decision. Supplier qualification (audits, sample parts, financial checks) determines who is allowed to win, and sourcing across borders adds freight, duties, and lead-time exposure to the comparison. The cheapest quote from an unqualified supplier is not the cheapest quote.
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