Written by Marijn Overvest | Reviewed by Sjoerd Goedhart | Fact Checked by Ruud Emonds | Our editorial policy

Types of Sourcing Process

Many of us know only four types of sourcing processes. However, it is not even half of what experts know. Below are the following types of sourcing processes:

1. Sole sourcing

Sole sourcing is a process that pertains to a situation when only one supplier provides the product or services that you need. 

Typically, sole suppliers are those who manufacture obsolete products. This makes them unique as the materials that you need are only found by buying them. 

2. Single sourcing

Single sourcing is a method that refers to more than one supplier who can provide for your needs. The organization will only select one of the suppliers to give what they need.

The organization considers affordability, reliability, and quality of materials or services in selecting a supplier. 

3. Dual sourcing

Dual sourcing is the process of using two different suppliers for your specific goods or services. In simple terms, The organization will operate using two different suppliers for the same product. 

This process is mostly used to decrease the chance of overreliance on a single supplier.

4. Multi-sourcing

Multi-sourcing is an approach in which products or services are contracted to numerous suppliers needed to conduct the project. In simple terms, instead of using traditional single sourcing, this method hires various suppliers to make the project. 

5. Outsourcing

Outsourcing is a supplier sourcing process of finding a third-party supplier to take on the supervision or creation of the project. 

Usually, outsourcing is used when the organization does not have the required skills or expertise in-house for a product or service.

6. Co-sourcing

Co-sourcing is a partnership between a customer and a service provider or a supplier. The company selects a supplier to work alongside its team. 

It is different from outsourcing as the internal team will work together with the external team. The company’s employees take an active part in the creation of the project. 

7. Near sourcing

This supplier product sourcing process considers placing some of your operations close to where you sell products or provide services. 

8. Global sourcing

Global sourcing is the process where businesses source goods or services in the global market to acquire the highest level of efficiency. 

The focus of global sourcing is to source cheaper materials or services while maintaining the exact quality standards. Numerous suppliers who offer cheap yet quality products can only be found overseas. 

9. Low-cost country sourcing

This process involves finding materials with lower production and labor costs. Low-cost country sourcing is focused on cutting down the operating expenses of an organization.

China is the go-to country for many businesses. China has many factories that offer lower manufacturing and labor costs. 

10. Captive Service Operations

This sourcing process involves organizations establishing some of their parts or wholly-owned enterprises overseas. This kind of method allows greater control for the organization. However, it will severely affect the economies of scale of an organization.

11. Vertical Integration

This process involves the merging of companies at different production phases in the same industry. 

When a company acquires an input supplier, it is called backward integration. On the other hand, forward integration happens when it acquires other companies into its distribution chain. 

12. Subcontracting arrangements

This arrangement requires a contract between a contractor and a subcontractor to perform a certain work that is part of the project. This method is usually between two offshore companies.

Supplier Sourcing Tools

We’ve compiled some of the tools you may need on your Supplier Sourcing journey below.

1. Zycus

Zycus has the complete solution for procurement issues. From e-sourcing to spend analysis, it has developed ways to achieve efficiency in our procurement process. 

Negotiating strategic agreements is better and faster for Zycus. This will help streamline the process of selecting your potential supplier.

2. Simfoni

The Simfoni e-sourcing removes the intensive labor process of traditional sourcing and replaces it with a more efficient way. It used AI technology to improve its e-sourcing process. 

One of its features is that it enables the organization which suppliers are certified as diverse suppliers. This allows the organization if the suppliers fit them the most. 

3. GEP

GEP is one of the leading providers of strategic sourcing outsourcing services in the world. It has more than 200 category experts and sourcing consultants. Additionally, it has efficient e-sourcing software tools that will help you greatly in finding outsourcing providers.

Conclusion

Supplier sourcing stands as a pivotal task in procurement, necessitating a nuanced understanding of various methods and tools.

Armed with the insights from this article, readers are poised to enhance their knowledge and proficiency in supplier sourcing, contributing to the success of their procurement endeavors.