5. Sourcing Strategy

This chapter discusses sourcing strategies. It starts with an introductory case-study considering the logistics coordination concept of a global car manufacturer. First, the roles of purchasing, procurement, and sourcing in supply chain and operations management are elaborated. The basic elements of a sourcing process are defined. Next, the issues of make-or-buy versus outsourcing, as well as organizational issues in sourcing are discussed. Subsequently, sourcing strategies are classified according to the number of suppliers, geographical supplier distribution, and sourcing principles. The methods of spend analysis and supplier selection are presented. Basic elements of the supplier relationship management (SRM) are classified. All proposed concepts are further illuminated by examples such as the sourcing strategy of a global electronics company and the just-in-time strategy in the automotive industry. Additional case studies, Excel templates, tasks and video streams as part of an E-supplement enrich this chapter.