Sourcing

Sourcing & RFx

Definition

The upstream procurement activity of finding, evaluating and selecting the suppliers a business will buy from.

Explanation

Sourcing answers 'who should we buy from and on what terms', as distinct from the operational buying that follows. It spans market analysis, supplier discovery, RFx, negotiation and award, and sets the prices and terms that the procure-to-pay cycle then executes.

Example

The sourcing team consolidates twelve regional stationery suppliers into two national ones, cutting unit prices and admin overhead.

Related terms

Strategic Sourcing — A structured, data-driven approach to sourcing that aligns supplier selection with long-term business goals rather than one-off price hunting.
Request for Quotation (RFQ) — A sourcing document that asks multiple suppliers to price the same clearly-specified requirement so their bids are directly comparable.
Supplier Selection — The decision process of choosing which supplier (or suppliers) to award business to after evaluating bids or proposals.
Category Management — Managing related groups of spend as strategic business units, each with a tailored strategy and dedicated ownership.

Related concepts

Source-to-Pay (S2P) — The widest procurement cycle — sourcing and supplier selection on top of the operational procure-to-pay buying process.
Request for Quotation (RFQ) — The competitive sourcing document that asks multiple suppliers to quote against one clear specification so bids are directly comparable.

Frequently Asked Questions

What is Sourcing?

The upstream procurement activity of finding, evaluating and selecting the suppliers a business will buy from. Sourcing answers 'who should we buy from and on what terms', as distinct from the operational buying that follows. It spans market analysis, supplier discovery, RFx, negotiation and award, and sets the prices and terms that the procure-to-pay cycle then executes.

Can you give an example of Sourcing?

The sourcing team consolidates twelve regional stationery suppliers into two national ones, cutting unit prices and admin overhead.

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