Discuss five supplier sourcing policies

1. Make-or –Buy Decision: Make-or-buy decisions compare the cost of producing a component or
providing a service internally with the cost of purchasing the component or service from an
external supplier. The fast changing competitive environment demands greater flexibility and
capability to deal with environmental changes and uncertainty. This involves not only focusing
on financial or marketing strategies but it may demand careful analysis of all functional
strategies. Many companies are focusing only on what they are good at and outsource the rest.

2.Single/multiple sourcing:
-Single sourcing:
Single sourcing of an item means that the company adopts the practise of purchasing all its
requirements for an item or service from one supplier although a number of suppliers may have
the capability to supply. In sole sourcing, only one supplier supplies all the goods.Multiple sourcing:
-Multiple sourcing of item(s) means that the company adopts the practice of purchasing all its
requirements from various suppliers in the market. The objective of multiple sourcing is to
maximize benefit on prices and services. In situations of multiple sourcing, both buyers and
suppliers feel a high level of uncertainty and therefore there are multiple controls to ensure
successful transaction.

3. E-sourcing:
E-Sourcing is a suite of collaborative, web-based tools that enable procurement professionals and suppliers to conduct the strategic activities within the procurement lifecycle over the internet.
These strategic activities including requirements and specification definition, tendering and
supplier selection, and contract award and management are designed to deliver value for money
procurement solutions to the public sector. E-Sourcing helps to encourage consistency with policy and best practice and increase sourcing and contract management efficiency and effectiveness.

4. Outsourcing:
Is the strategic use of resources to perform activities handled by internal staff and their resources?
It is a management strategy by which an organization out sources major non-core functions to
specialized, efficient service providers. The basic objective is normally cost reduction and
concentration on core activities.

5. Sub-contracting
Sub-contracting entail means of augmenting limited resources and skills while enabling the
contractor to concentrate on their main area of expertise. Sub-contracting relieves the main
contractor of some duties and therefore being in a position to concentrate on supervision. Also
sub-contracting reduces cost on the part of main contractor as well as attracting highly qualified and experienced experts to do the job.
6. Lean supply
This is the state of business in which there is dynamic competition and collaboration of equals in the supply chain, aimed at adding value at minimum total cost, while maximizing end customer
service and product quality. In this policy the purchaser seeks to minimize the number of suppliers.
This is done because of the following reasons: promote high standards and quality, enable
development of good buyer-supplier development, promote accountability, aid the
implementation of quality management systems etc. Lean supply chain management is considered
by businesses who want to streamline their processes by eliminating waste and non-value added
activities.
7. Partnership sourcing:
This is the commitment to both customers and suppliers, regardless of size, to a long-term
relationship based on clear, mutually agreed objectives to strive for world class capability.
Partnering aims to transform short-term adversarial customer/supplier relationships focussed on
the use of purchasing power to secure lower prices and improved delivery into long term
cooperation based on mutual trust in which quality, innovation and shared values compliment
price-competitiveness.
8. Co-destiny and co-maker ship:
Co-destiny is where:
The future of all the participating organisations depends to a greater or lesser extent on the
success of a partnership relationship in which each organisation has made an investment.
Co-maker ship may be defined as close cooperation between the buyer and seller organisations in
respect of product development, manufacture or supply. Also co-maker ship can be defined as
working together so that each party benefits more from collaboration than working independently.
9. Supplier development policies:
This is any activity that a buying firm undertakes to improve a supplier’s performance and
capabilities to meet the buying firm’s supply needs. Supplier development is accomplished by:
instigating competition among suppliers, working directly with suppliers through training and other activities, assessing supplier’s operations and also providing incentives to improve performance.
Supplier development in world class firms is proactive and it focuses on helping suppliers retain the learning that occurs in the development process to help them improve their own systems. Supplier development requires that both firm commit financial, capital and personnel resources to work; share timely and sensitive information and create an effective means of measuring performance and progress.

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Titany answered the question on November 25, 2021 at 05:15