ANALYZE SOME
SOURCING
METHODS
CLASS: 010441600556 -
SCM GROUP: 1
OUTLINE
1 What is sourcing?
2 Importance and benefits of sourcing
3 Analyze some sourcing methods
4 Impact of the Current Global Context
on Sourcing
1
WHAT IS
SOURCING?
What is sourcing?
• Sourcing is the process of searching,
evaluating, and selecting suitable suppliers
to meet a company's needs for materials,
goods, or services. It is a critical first step in
the supply chain to optimize costs, ensure
product quality, and maintain stable supply.
• These methods can vary depending on the
company's strategy and scale.
1. Requirements definition
2. Category analysis/strategy
3. Supplier identification
4. RFI/RFQ
5. Negotiate contract
6. Manage contract
7. Supplier management
OUTLINE
1 What is sourcing?
2 Importance and benefits of sourcing
3 Analyze some sourcing methods
4 Impact of the Current Global Context
on Sourcing
IMPORTANCE
2 AND BENEFITS
OF SOURCING
Importance
• Ensuring uninterrupted production
and operation
• Helping control costs and boost
profits
• Creating a competitive advantage
• Minimizing risks in the supply chain
• Building long-term partnerships
with suppliers
Benefits
OUTLINE
1 What is sourcing?
2 Importance and benefits of sourcing
3 Analyze some sourcing methods
4 Impact of the Current Global Context
on Sourcing
ANALYZE
3 SOME
SOURCING
METHODS
Analyze some
sourcing methods
Classification by Technology-Based
Strategic Scope Approach
Classification by Geographical Scope-
Approach Based Approach
C l a s s i fi c a t i o n b y
Strategic Scope
• Traditional Sourcing
• Strategic Sourcing
Traditional
Sourcing
Traditional sourcing refers to conventional
procurement methods, focusing on finding
suppliers who can provide goods and services at
the lowest possible price. It involves a manual
process, often paper-based, with direct interaction
between procurement specialists and suppliers.
Traditional
Sourcing
Characteristics
• Price-focused
• Manual process
• Limited relationship management
• Historical data and personal
connections
Traditional
Sourcing
Advantages
• Better client control
• Clear cost estimates
• Detailed specifications
• Competitive bidding
Traditional
Sourcing
Disadvantages
• Time-consuming
• Potential disputes
• Higher costs
• Reduced flexibility
• Limited collaboration
Strategic
Sourcing
Strategic sourcing is a systematic approach
to procurement that maximizes value and
efficiency by focusing on long-term supplier
relationships, spend analysis, market
dynamics, and aligning purchasing decisions
with business objectives.
Strategic
Sourcing
Characteristics
• In-depth data analysis
• Market research
• Supplier collaboration
• Negotiation & contract
management
• Continuous improvement
Strategic
Sourcing
Advantages
• Cost reduction
• Improved supply chain
performance
• Enhanced quality & innovation
• Risk mitigation
• Alignment with business goal
Strategic
Sourcing
Disadvantages
• Resource-intensive
• Time-consuming
• Supplier dependency
• Market risks
• Adjustment challenges
Analyze some
sourcing methods
Classification by Technology-Based
Strategic Scope Approach
Classification by Geographical Scope-
Approach Based Approach
C l a s s i fi c a t i o n b y
Approach
• In-Sourcing
• Out-Sourcing
• Competitive Bidding
• Restricted Bidding
In
02
Sourcing
In-sourcing is the process by which
a company leverages its own
resources, personnel, and facilities
to directly carry out production and
supply activities within the
organization.
Advantages
Superior quality control
High confidentiality
Operational autonomy
Disadvantage
High initial capital investment
Lower operational efficiency
Lack of flexibility
Out
02
Sourcing
Outsourcing is the practice of delegating
part or all of the production and supply
operations to a specialized third-party
provider when the company lacks
sufficient capabilities or dedicated
departments.
Advantages
Cost Optimization
Access to Expertise and
Technology
Scalability & Flexibility
Disadvantage
Vendor Dependency
Quality Control Issues
Data Security & Confidentiality
Risks
When should companies apply
Insourcing and Outsourcing?
Competitive Bidding
• Open Bidding
• Restricted bidding
Competitive Bidding
Competitive bidding is the process of selecting a contractor or supplier by inviting
multiple parties to participate and compete to present the best proposal based on
predefined criteria, in order to ensure fairness, transparency, and the selection of
the most effective partner for the project or procurement.
Competitive Bidding Advantages
Save cost => Improve
quality
Enhance the credibility and
accountability
Transparency
Compliance with the law
Competitive Bidding
Disadvantage
Time-consuming
Focus only the lowest price
Restricted Bidding
Restricted bidding is a method of contractor selection in which the procuring entity does
not conduct an open bidding process but instead directly invites one or a limited number of
contractors who are assessed to have the capacity to carry out the contract. This is a faster
and more streamlined approach, commonly used in special or exceptional circumstances.
Restricted Bidding
• Shorten the time => reduce cost
• Control expertise
Analyze some
sourcing methods
Classification by Technology-Based
Strategic Scope Approach
Classification by Geographical Scope-
Approach Based Approach
Te c h n o l o g y - B a s e d
Approach
• E-Sourcing
• B2B (Business-to-
Business) network &
platform sourcing
Using online tools to
E-Sourcing
manage the
procurement process
E-sourcing is the application of Includes RFQ, RFP, e-
information and communication bidding, and supplier
technology to automate and optimize analysis
the process of searching for,
evaluating, and selecting suppliers
online. Integrated into ERP
systems or digital
procurement
platforms
E-SOURCING
Advantages Disadvantage
1. Save costs through
1. Need to invest in
transparent competition
technology infrastructure
2. Shorten search and
and training
negotiation time
2. Traditional suppliers may
3. Increase control, make
find it difficult to adapt
strategic decisions
3. Information security risks
4. Automate, reduce the
if not well controlled
risk of manual errors
B2B (Business-to-Business)
network & platform sourcing
B2B (Business-to-Business) network & platform
sourcing is a method of using electronic trading floors
or digital platforms to connect businesses together
Connecting many Provide product catalogs, Including global, regional
businesses, creating a pricing, profiles, and domestic platforms
digital "marketplace" payments and shipping to serve diverse needs
B2B (Business-to-Business) network &
platform sourcing
Advantages Disadvantage
1.Fast access to global 1.Initial platform investment
supply required
2.Reduce transaction and
2.Language, cultural, and
search costs
fraud risks
3.Increased trade
3.Some platforms charge
opportunities, expanded
markets high fees or control data
4.Analytics and logistics 4.Dependence on third party
support intermediary
Analyze some
sourcing methods
Classification by Technology-Based
Strategic Scope Approach
Classification by Geographical Scope-
Approach Based Approach
Geographical Scope-
Based Approach
• Local-Sourcing
• Global Sourcing
Local
Sourcing
Local sourcing, also known as domestic sourcing,
involves procuring products, materials, or services
from manufacturers or suppliers within the same
country.
Advantages Disadvantage
Sourcing
Community Support Limited Options
Quality Control
Cost
Local
Communication
Supply Chain
Vulnerability
Shorter Lead Times
Global
Sourcing
On the other hand, global sourcing involves
procuring goods, materials, or services from
international suppliers.
Global Sourcing
Advantages Disadvantage
1.Cost Savings 1.Logistical Complexity
2.Diverse Options 2.Communication Barriers
3.Increased Capacity
3.Quality Control
4.Market Expansion
Optimizing the balance between global and local sourcing
OUTLINE
1 What is sourcing?
2 Importance and benefits of sourcing
3 Analyze some sourcing methods
4 Impact of the Current Global Context
on Sourcing
IMPACT OF
ANALYZE THE
4
CURRENT GLOBAL
SOME
CONTEXT ON
SOURCING
SOURCING
METHODS
Impact of the Current
Global Context on Sourcing
Global Local
Supply chain Technological
Trend toward gaps between
disruptions due to
diversification supply chains of
geopolitical
and nearshoring different
tensions
countries
Increase in raw Trade protection
material prices policies and tariffs
Global impact
on sourcing
Local impact on sourcing
Supports domestic
economic development
and creates local jobs
Supports domestic Aligns with
economic development sustainability goals and
and creates local jobs
emission reductions
Advantages in flexibility Influence of
and reduced
transportation risks domestic
support policies
THA
NK
