Management

CO: ” Define sourcing as a supply chain component, how to measure performance, and key strategies to improve effectiveness. ”

Forum Prompt:

Chose one of the following Forum prompts:

* Find a business example of outsourcing and explain the risks and benefits this company faces by outsourcing its components or finished products.

* There has been a push in many communities to source locally. Restaurants are specializing in local sourcing as are grocery stores and craft retailers. Identify the risks and benefits of this sourcing method.

* Explain the differences between sourcing manufactured products versus services.

* Identify some of the key challenges that occur in defining service specifications

* versus manufactured product specifications. Provide an example of each.
Identify the primary ways in which the sourcing function impacts supply chain management. Find an industry example where sourcing has significantly benefited the organization and where it has significantly hurt the organization.
Define in some detail the sourcing function in your organization including: methods, services and products, challenges & effectiveness, and control methods.

ANSWER

Sourcing

Sourcing

Sourcing refers to the collective and organized process of supply chain management that involves finding, evaluating, and end communicating with suppliers to provide goods and services to the business. Ways to measure sourcing performance include sourcing cycle time, vendor performance, cost savings, spend under management, and rate of sourcing that is catalog-based. Sourcing effectiveness can be improved through completing previous expenditure records, dividing items and sub-items, conducting expenditure by department and by the supplier, and making future demand projections.

Sourcing Manufactured Products versus Services

Sourced manufactured products have specific parameters in terms of location, amount, quality, and budget. Sourcing services are more about information management and the relationship between the client and the supplier is long-term and engaging. Manufactured goods can have precise measurements and be precisely described. They could have a specific color, material, or weight. This is not the case for service sourcing. Service is defined broadly and their contracts may be multiple-detailed agreements that stipulate outcomes, expectations, and timelines. Delivery of products is physical in a literal way while evidence of delivery of services is different.

Sourcing is mainly a relationship-driven exercise. An effective relationship between the client and the supplier is critical if satisfaction is to be achieved on both sides. In the product category, the relationship is usually an item after delivery but in services, the relationship is the delivery. In service sourcing, both parties are engaged in routine working relationships to achieve the intended purpose (Gassner, 2020). The sourcing function becomes a strategic information and management process that is long-term and used to manage knowledge and uncertainties. Service sourcing is intangible and can be complex in terms of information available, setting prices, and comparison with other service providers.

References

Gassner, S. (2020). How is service sourcing different from product sourcing? Grosvenor Performance Group. https://www.grosvenor.com.au/resources/how-is-service-sourcing-different-from-product-sourcing/