During the purchasing cycle, sourcing involves finding, vetting, and selecting suppliers. The process differs depending on whether tactical purchasing or strategic procurement is used. Tactical purchasing is reactive and may involve limited supplier searches from an approved vendor list with transactional history files.
This means that the supplier already meets the qualification criteria. If multiple suppliers are available, the buyer may issue a request for a proposal to find the lowest price. In some cases, only one supplier may be identified. A more detailed search may involve asking the organization’s current network of suppliers and salespeople or using internet-based technologies such as electronic catalogs and search engines.
Strategic procurement is a proactive approach where the organization actively searches for suppliers. This process is different and involves more robust qualification and selection. Selection takes into account factors in addition to price, such as technical ability, reliability, and after-sales service. The next session will discuss strategic sourcing in more detail.