In supply chain management, what does sourcing entail?

Sourcing in supply chain management specifically involves finding and selecting suppliers for the goods and services that a company requires to operate. This process is crucial because the choice of suppliers directly impacts product quality, cost efficiency, and overall supply chain performance. Effective sourcing processes typically include evaluating potential suppliers, negotiating contracts, assessing their capacity to deliver, and ensuring they can meet quality standards.

The importance of sourcing lies in its influence on not only cost management but also on building long-term strategic partnerships with suppliers. By effectively sourcing, a company can gain competitive advantages, such as improved prices, better materials, and enhanced innovation from its supply partners. This coordinated effort ultimately supports the overall goals of the supply chain, ensuring that products move efficiently from suppliers to customers.

Other activities mentioned, such as determining shipping methods, managing customer relationships, or calculating production costs, fall under different aspects of supply chain management and do not pertain directly to the process of sourcing itself.