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Definition Of Sourcing – Not As Simple As It Sounds
| Guest post by: Lee Lister |
Article Overview: The definition of sourcing can be simple and much more complex. The simple definition is “the processes involved in identifying potential vendors, conducting negotiations with them and then signing purchasing agreements with them to provide goods and/or services that meet your company’s procurement needs”.
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Free Download - What Type of Business Should I Start? By Lee Lister |
Definition Of Sourcing – Not As Simple As It Sounds
The definition of sourcing can be simple and much more
complex. The simple definition is “the
processes involved in identifying potential vendors, conducting negotiations
with them and then signing purchasing agreements with them to provide goods
and/or services that meet your company’s procurement needs”.
Sourcing of vendors for a company is one of the key
business processes that will directly impact upon the bottom line of any
company. Make a mistake with a vendor
and you may be waiting for your urgent supplies, receiving supplies that or sub
standard or not receiving supplies at all if they go bankrupt. Without supplies, a company cannot function
and cannot sell products to others.
Negotiate an incorrect price level and your company’s profit levels are
directly affected.
With services and large ad hoc purchases, the
complexity of the definition of sourcing increases. In this situation, sourcing
will include producing and evaluating Pre Qualification Questionnaires (PQQ’s)
and Invitation To Tenders (ITT’s) plus the entire new set of procedures that
are inherent with this complex activity.
A tendering situation needs to be fair and seen to be fair so the procedures
need to be very accurate and standardized.
Where staffing, whether the simpler form of hiring new
staff, or the more complex requirement for contract staff, is concerned the
definition of sourcing is even more long winded. In sourcing for staff, individual staffing
vendors first need to be chosen and then each potential staff member needs to
be assessed and reviewed. These
activities are surrounded with legal constraints and human issues. This ensures
for extra procedures with a two stage sourcing.
Perhaps the most complex definition of sourcing is
that of a large services only procurement in an area such as facilities
management or IT. In this procurement
activity, the company would explain their business problem, the current
situation and what they are hoping to achieve.
It would then be up to the potential vendors to propose their own
solutions. Evaluating this kind of bid
is very complex, has many different steps and is fraught with risk.
Perhaps the easiest definition of sourcing is those
surrounding a procurement auction. In this case, a project is posted in an
appropriate e-auction web site and the vendors then have to come to you and
make their own bids. In this procurement
activity much of the sourcing procedures are computerized and the vendors have
to find you and encourage you to choose them.
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About the Author: Lee Lister RSS for Lee's articles - Visit Lee's website From an early age she began an unparalleled journey through business consulting that continues to span across the UK, USA, Europe and Asia. She has consulted for a considerable number of companies all over the world. Specialising in business change management, start up consultancy and trouble shooting. Lee's experience in marketing and internet marketing is also keenly sought after. She is a prolific published writer of books, ebooks and articles and can easily be found on major search engine and Amazon. Her books include: FastTrack Bid Management, Proposal Writing For Smaller Businesses, How Much Does It Cost To Start A Business, Entrepreneur's Apprentice and a series of Start My New Business books that do as they say in the title! Her major web sites are: Click here to visit Lee's website   What Type Of Marketing Strategies Should I Use When Starting A New Business Have Laptop will Travel the Truly Mobile Office Entrepreneurs Want to Start A Car Cleaning Business Can You Afford To Treat PQQs Lightly Entrepreneurs Are You Writing A Tender Or Proposal And Want To Differentiate Your Company From The Competitor |
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