Insights into the Strategic Sourcing Decision: Understanding Buyer- Supplier Relationships

The wide range of products and services that are being sourced today has made the company’s procurement organization an increasingly important function. The complexities of managing sourcing options is greater than ever making the procurement function critical for overcoming an increasingly global, complex and uncertain sourcing environment. This paper discusses an overview of relevant sourcing models and their importance for establishing a strategic sourcing decision, how buyer-supplier relationships play a key role in the strategic sourcing decision and key attributes of the various models for strategic sourcing. We illustrate the diversity of the sourcing choices with four strategic procurement scenarios that motivate the development of solid strategic sourcing decisions. The material is presented as a teaching document from a point of view that is integrative of key sourcing paradigms and is written from a context that is readily understandable.