What Is Sourcing In Supply Chain?

In most organizations, the process of sourcing a product or service is the first step in the supply chain process. Sourcing involves finding a balance between the quality and affordability of the products and raw materials needed. The goal of most procurement teams is to reduce expenses and improve the bottom line.

In this sourcing guide, we’ll give you everything you need to know about sourcing, from what it is, the different types of sourcing and sourcing strategies, to five companies that can provide you with sourcing services. Let’s dive in now!

What Is A Supply Chain?

The supply chain is a functional chain structure that connects suppliers, manufacturers, distributors, retailers, and ends users as a whole through the control of information flow, logistics, and capital flow, starting from purchasing raw materials, making intermediate products and final products, and finally delivering them to consumers by the sales network. It is not only a logistics chain, information chain, and capital chain connecting suppliers to users, but also a value-added chain, in which materials increase their value in the supply chain due to the process of processing, packaging, transportation, etc., and bring benefits to related enterprises.

What Is Sourcing?

Sourcing refers to the process of selecting, reviewing, and disposing of suppliers that can provide the goods needed for the day-to-day operations of an organization. Sourcing entails researching, developing, and implementing strategies, establishing a required quality and quantity metrics, and selecting suppliers that meet these criteria. This process allows procurement to maintain the organization’s supply chain and ensure that the company has access to the tools it needs to achieve its goals.

Outsourcing

The most practical and straightforward example is hiring a party outside the company to perform a service or create a good that has traditionally been performed in-house. This can also be accomplished by moving operations abroad or partnering with a domestic vendor. Both back-office and front-office functions can be outsourced.

Insourcing

This type of outsourcing involves you delegating a job to a person or a team within the company. Most company leaders prefer this option when available because it is a good cost-saving strategy that allows for on-the-ground oversight of the quality of the goods and services needed.

Proximity Sourcing

This involves placing some of your operations close to where your final product will be sold.

Low-Cost Country Sourcing (LCCS)

Low-Cost Country Sourcing involves sourcing materials from countries with lower labor and production costs. This type of sourcing focuses on cutting the overall operating costs of the business. China has become the preferred country for most global companies to use this sourcing method.

Global Sourcing

The world is now a vast marketplace. Purchasing goods and services from international markets across geopolitical borders has become a simple process. This method has many benefits and gives your organization exposure to different markets; in addition, you can gain insight into how business is conducted around the world.

How To Conduct Sourcing?

Understand the category

Clearly define the purchasing category or commodity. What is the quantity or service currently being procured, what type, and what size? Who are the end users, where are they, the logistics being used, and who else is involved in the supply chain?

Understand the supply market

Delve into the external market to find potential global and local suppliers and identify risks and opportunities. Find out what real alternatives are available from current suppliers.

Develop a sourcing strategy

The strategy chosen must be the one that best fits your business requirements as well as your capabilities and resources. It is recommended that a cross-functional project team be formed to involve all stakeholders, not just end users and subject matter experts (SME).

Select an appropriate sourcing process

The most common method in strategic sourcing is to solicit bids using a Request for Proposal (RFP), sometimes preceded by a Request for Information (RFI) to pre-qualify suppliers. The RFI must clearly define the specifications, including delivery and service requirements, legal terms and conditions, and any other specific requirements.

Selecting suppliers and negotiating terms

The vendor selection process includes multiple rounds of negotiations with a suitable short list of potential vendors. The final selected vendor must be based on pre-agreed criteria and the contract must be drafted and signed by both parties.

Implementation and Integration

Ensure that suppliers, internal end users, and everyone affected are involved in the design and implementation of the solution. Successful implementation is only possible through extensive communication and a strong focus on change management.

Report and track results

This is a critical step in determining the success of any strategic sourcing program. Technology solutions applied to track savings will determine when and where suppliers are adding value. Automated reporting provides faster, more accurate feedback and streamlines supplier relationship management (SRM).

Top 3 Companies Providing Sourcing Services To Improve Your Supply Chain In 2022

Honest Fulphilment

Honest Fulphilment Sourcing Service Company

Located in Xinxiang, Henan, China, this sourcing company provides product sourcing services for dropshipping store owners. Dropshipper simply submits a purchase request on the Honest Fulphilment App, and the professional sourcing team will help you get prices from suppliers and give you timely feedback. And Honest Fulphilment also provides sample shooting, production tracking, and quality control services to ensure you are covered from start to finish.

Services Overview:

Sourcing

Quality Inspection

2PL

3PL

Package & Branding

Dropshipping Product Photos & Videos

storage&warehouse

Integrated Dropshipping Services

Easy Imex

Easy Imex Sourcing Company

Easy Imex is another international outsourcing company for medium to large companies owned by Adam Gilbourne.

The company now acts as a one-stop import service, offering a wide range of services including product sourcing, procurement, and negotiation, transportation and logistics, quality control, customs, taxes, factory audits, and tours.

Services Overview:

Product Sourcing

Negotiation

Quality control

Factory visits

Transportation and Logistics

Guided Imports

Guided Imports Sourcing Company

Guided Imports is a supply chain management service provider that offers sourcing, quality control, transportation, and other supply chain services to importers. They have offices in China, Singapore, and Thailand.

They offer a customized approach to each client, which includes services such as cost estimating, quality control management, CSR audits, and door-to-door shipping. In addition, they offer assistance in the area of product compliance. For example, they can help you assess country-specific labeling requirements.

Services Overview:

Supplier Sourcing

Quality Control

Freight forwarding

Product Compliance

Amazon FBA

Conclusion

We hope this list will help you to make the right and sensible decision to choose the best sourcing company to handle your goods and products from China or even other parts of the world. If you need to find a reliable supplier for your dropshipping store? Contact Us Now!

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