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What is sourcing in procurement?

Sourcing, in the context of procurement and supply chain management, refers to the process of identifying, evaluating, and selecting suppliers or vendors to provide goods, services, or materials required by an organization. The goal of sourcing is to find the best suppliers that offer competitive prices, quality products or services, and reliable delivery.

Sourcing involves various activities, including supplier identification, supplier evaluation, negotiation, and contract management. Organizations may engage in strategic sourcing, which focuses on long-term supplier relationships and cost optimization, or tactical sourcing, which addresses immediate procurement needs.

Efficient sourcing practices contribute to cost reduction, supplier relationship management, risk mitigation, and overall procurement efficiency.