Sourcing Concepts

Sourcing concepts - Sourcing has its etymological origin in the English word source, which means source or source of supply. Sourcing concepts relate to the supply of the company with material, parts, assemblies and goods. They are therefore closely related to the design of procurement marketing.

In particular in connection with concepts for just-in-time and supply chain management, new concepts for supplying production have been developed. The figure gives an overview in the form of a morphological box. This can help companies to determine their own paths for sourcing in a customer-oriented manner.

Nach der Art der Eingliederung der Zulieferleistung lassen sich Insourcing und Outsourcing unterscheiden.

Insourcing

In insourcing, services from suppliers are either temporarily purchased and used under the uniform management of the own company, or suppliers are added and this is the more common definition of insourcing through vertical integration into one's own portfolio.

Backsourcing

Backsourcing refers to the reintegration of the scope of services into one's own company, not infrequently after a loss of know-how, quality problems and other events have forced such a step in outsourcing. With outsourcing, services are outsourced that were previously created in-house.

Insourcing and outsourcing can be observed in parallel: On the one hand, there is a concentration, for example by automobile manufacturers, on the essential car components that make up their core competence, such as the body and engine.

In the meantime, almost all automotive companies have implemented an outsourcing solution for their seat production, as this is not one of their own core competencies. On the other hand, numerous automotive suppliers are developing by insourcing from manufacturers of simple parts to suppliers of complete subsystems.

Nach der räumlichen Selektion der Zulieferanten lassen sich Local, Regional und Global sourcing differenzieren:

Local sourcing

Local sourcing refers to the selection of local suppliers in the target market, which is often prescribed by politically induced and legally established rules such as local content provisions. These provisions require a minimum proportion of product components from local production so that these are considered to be domestic products (international market entry barriers). Local sourcing also has a beneficial effect on the implementation of just-in-time concepts.

Global sourcing

Global sourcing describes the worldwide selection of suppliers from the primary point of view of comparative advantages, for example with regard to costs, quality, flexibility and innovation.

Regional sourcing

Regional sourcing is a supply alternative that takes regional suppliers into account when selecting, for example, legal, technical, cultural or linguistic similarities.

With regard to the number of suppliers per delivery item, a distinction can be made between sole, single, dual and multiple sourcing.

Sole sourcing

With sole sourcing, there is only one supplier available, so that, for example for patent law reasons, there is no option and the supplier practically has a monopoly.

Single sourcing

In single sourcing, after selecting from several potential options, one supplier is given sole responsibility for the delivery of a part or a subsystem, for example. This has the advantage that the supplier with the best price-performance ratio can be selected. However, abuse of the resulting market power cannot be ruled out.

Dual sourcing

With dual sourcing, two suppliers are determined for each delivery item, whereby it is not uncommon for a main supplier to be determined who, for example, supplies 60 or 70,000 of the quantity and the second supplier then supplies the remaining portion. This spreads a certain amount of risk. If one of the two suppliers has production problems, the other can compensate for the resulting shortfall in whole or in part.

Multiple sourcing

Ultimately, multiple sourcing means that several suppliers are commissioned to supply an item to be procured. This means maximizing security of supply and the possibility of minimizing procurement prices by selecting the cheapest provider in each case. On the other hand, problems with regard to quality assurance and, especially with special parts, high costs for the production of tools can stand against such a solution.

It is foreseeable that the term sourcing will be extended to production factors such as operating resources, personnel, capital, information and knowledge (outsourcing).