In simple words, sourcing is the process of selecting suppliers to provide the goods and services an employer need to run his/her business. The process of sourcing can be complex. The process of sourcing involves some important works like finding quality sources of goods and services, negotiating contracts, market research, quality testing, and establishing standards.
Importance of Sourcing
- Cost management
Strategic sourcing provides benefits for both buyers and suppliers. Buyer’s negotiation reduces the costs of goods.
When one finds the right source for their products, it truly becomes a partnership. Developing a close relationship can lead to higher quality and efficiency.
- Managing Risk
A strong relationship built of trust can reduce risk. When both parties know they can depend on each other, it opens the door to honest conversation.