Sourcing models refer to the different approaches and strategies organizations use to procure goods, services, or resources from Suppliers. These models outline the methods and processes by which organizations identify, evaluate, select, and engage with suppliers to fulfill their procurement needs. 

Sourcing models serve as frameworks that guide organizations in making informed decisions about supplier selection, contract negotiation, and overall procurement strategy. These models take into account various factors such as the organization's goals, market dynamics, supplier capabilities, risk tolerance, and desired outcomes.

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What are Sourcing Models ?

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Types of Sourcing Models in RFP's 

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Why Choose a specific Model

By adopting the correct sourcing model we can optimize the procurement processes, achieve cost savings, mitigate risks, enhance Supplier relationships, and ultimately deliver value to our stakeholders. Sourcing models are a vital component of procurement strategies as they provide structure and direction in the procurement lifecycle, from identifying needs to executing contracts and managing supplier relationships.

Different sourcing models offer distinct advantages and considerations, providing organizations with flexibility in aligning their procurement strategies with their specific requirements.

What are some types of Sourcing Models we can use ?

Accomodative

Avoidant

Competitive

Collaborative

3-6 Months out

This model involves selecting a single Supplier to provide the required goods or services. It can be beneficial when there is a need for consistency, quality control, or when the Supplier has a unique offering that cannot easily be replicated. Sole sourcing can also simplify procurement processes and allow for stronger relationships with the chosen Supplier.

Environmental Pollution

Note: Single Source justification form is required for this type of Sourcing activitiy.

In this model, multiple Suppliers are chosen to provide the goods or services. This approach promotes competition which leads to better pricing, improved quality, and increased innovation. Multiple sourcing also reduces the risk of single Supplier dominance and provides backup options in case of issues or disruptions.  It provides for transparency, fairness, and Cost savings.

This is one of the Preferred RFP options !! 

Multi Sourcing (competitive bidding)

Avoidant

Collaborative

3-6 Months out

Environmental Pollution

This model takes a comprehensive approach to procurement. It involves analyzing the organization's needs, identifying suppliers, negotiating contracts, and managing supplier relationships. Strategic sourcing aims to optimize costs, mitigate risks, and create long-term value. It focuses on factors beyond price, such as quality, innovation, sustainability, and the overall impact on the organization's goals.

This is one of the Preferred RFP options !!

Sole Source

Accomodative

Competitive

Note: This is similar to Multi Sourcing but is focused on specific functions that are Outsourced and are usually In-House functions

This model involves contracting out certain business processes or functions to external suppliers. It allows the organization to leverage the expertise and resources of specialized Suppliers, which can lead to cost savings and improved efficiency. Outsourcing can be utilized for various functions, such as IT services, manufacturing, logistics, or customer support. It enables the organization to focus on its core competencies and strategic objectives.

Using Auctions for Sourcing

A method of procurement where Suppliers compete against each other in real-time including online, to secure a contract by submitting bids. This approach allows organizations to obtain the best possible price and terms for the goods or services they require. Here's an overview of auctions in sourcing activities: 

The 2 most commonly used Auction/Bidding Events

Sole Source

Multi Sourcing (competitive bidding)

Accomodative

Avoidant

Competitive

Collaborative

3-6 Months out

Also known as a closed-bid auction, this type of auction involves Suppliers submitting their bids privately and simultaneously. Zycus is normally the Platform used to conduct these Auctions (RFP Event)  Sealed-bid auctions ensure fairness and prevent participants from being influenced by other bidders' offers.  The Lowest bid does not always win as the bids are compared and analysed using  balanced assessment criteria

Environmental Pollution

Zycus home is the standard location for the majority of Auction (RFP Events)

 In a reverse auction, the buyer posts the requirements and specifications for a product or service. Suppliers compete by submitting their bids. The price typically starts high and gradually decreases until a Supplier agrees to provide the goods and/or services at the price. Reverse auctions are commonly conducted online (e-auctions). However, this is not considered the preferred method by CBRE to maintain a fair and equitable supply partnership.

This is NOT one of the Preferred RFP options !!