2-20.1 Sourcing Strategy

2-20.1.1 General

Sourcing strategies are developed by the purchase/SCM team and, if applicable, are provided general direction by the category strategy. The purchase/SCM team should consider the following questions before starting the solicitation process. If the answer for each of the following questions is “no,” the competitive purchasing method is probably the best business solution. If the answers to some, but not all, of the following questions are “yes,” the purchase/SCM team should use its business judgment in deciding how to proceed:

• Can the requirement be satisfied most readily and effectively through comparison of published price lists or through a simple request for quotations (RFQ), with additional negotiation as appropriate?
• Would a solicitation exercise be unjustified? Namely, is the proposed purchase of significantly low volume? Or is the possible economic advantage relative to the cost of a solicitation process too small?
• Can the requirement be added to an existing contract satisfactorily or sourced through an existing broad-range agreement?
• Is there realistically only one potential supplier, thereby justifying a noncompetitive purchase?

2-20.1.2 Sourcing Types

The type of sourcing is an essential element of the sourcing strategy, and must be decided upon by the purchase/SCM team. There are three types of sourcing:

• Multiple sourcing.
• Single sourcing.
• Sole sourcing.